As an owner, you may not utilize a master lease very often with your tenants, but you might want to consider the opportunity with a property manager. Today, I’ll help you understand how it works and what the best techniques are.
As a professional property manager in Tampa, this is one tool in my toolbox and it often works out a lot better for all parties involved than doing a standard management agreement, where I would be an agent for you. A master lease puts me, the property manager, in as principal. I become the landlord to the tenants in the property. You, as the property owner would enter into a business relationship with a master tenant. The lease would be between you and me, putting me into the master tenant position. Then, I would turn around and sublet the property to an occupant tenant. A sublease may scare some people, but it’s really no big deal and it can often put you in a better position.
Master leases are often better for the property owner because it takes the vicarious liability out of the owners realm. When you hire an agent, you’re looking at everything through the eyes of that agent. Anything your property manager or agent does reflects on you. That can be scary, so from time to time you might want to consider a master lease situation.
At Cavalier Estates, most of our homes are actually master leases. Again, it’s not the answer for every situation, but it’s another tool in our toolbox to help property owners manage their investment homes. We work directly with tenants in this relationship, as their landlords, and we continue to treat you as we would any other joint venture. The nice thing is, you’re out of the picture and you don’t have to deal with details such as looking at credit applications and giving approvals or worrying about maintenance concerns. We collect the rent, we handle any of the maintenance based on terms we agree to, and you can continue to earn your monthly rent income.
Master leases can be difficult to really understand, especially if you have never done one before. It’s a great option if you are willing to let a master tenant sublet your property. If you think you’d benefit from learning more about the master lease option, I’d be happy to talk to you in person to help you decide if you want to make it work for your property. Please contact us at Cavalier Estates to learn more.