Master Lease Option Method Review
There are so many ways to be in real estate; flipping houses, rehabs, rentals, mobile homes, notes, and they are all profitable. At some point in your learning curve though, you realize the place where you maximize return on time, effort and money put into a venture is commercial real estate.
There’s no getting around commercial real estate is where you can make a quantum leap in your personal net worth. You can start small, say with a 2 unit office building rehab, and go big, say with a 200 unit apartment building … and beyond. With commercial real estate, the sky is the limit, it’s just a matter of how high you want to go.
The reason for this is commercial real estate is income property, and it benefits from economies of scale. The more units a property has producing income, the lower the expenses per per dollar of rental income. In a nutshell, this means that each piece of commercial real estate is an investment opportunity, and the bigger the property is, the more free cashflow is available for return on investment.
So once you get the hang of how to run a piece of income property, and (importantly) maximize it’s value, you can start on the low end, say, with a 10 unit apartment building, and then advance to considerably larger properties, say 100-200 unit properties without a lot of fanfare.
The key is … getting started.
One of the simplest and least taxing ways to get you into the driver’s seat of an apartment building is to use a Master Lease Option. The Master Lease Option (MLO) is the income property version of the “lease-option” you encounter in the single family world. The only significant difference is the provision in the agreement that allows you to lease from the Seller, a single entity, and sublease to Tenants, multiple entities. The rest is substantially the same.
The power of the Master Lease Option is that it allows you to control the property while you increase the value of it, and then capture all that value for yourself. The beauty of it (if it is possible for a financing agreement to be beautiful) is that gain that control without taking title, getting bank financing, raising large tracts of private money, and assuming all of the risk that comes with taking title.
Little or no up front cash is required, your credit is a non-issue, you take literally no risk, and you can have a deal put together and “closed” in a couple of weeks. It’s hard to think of a better way to get started doing apartment deals.
But how do you do the deals?
You are lucky in this regard, because Susan Lassiter-Lyons has created a wonderful course addressing just this called, the Master Lease Option Method.
The course is an entirely digital product that consists mainly of videos, audios, forms, and transcripts.
The main body of the course consists of 15 videos taking you through the process from start to finish. The titles of the videos are as follows:
- What is a Master Lease Option?
- Why Master Lease Options are a good idea
- The property types that work best for a Master Lease Option
- Exit Strategies
- Syndication Strategies
- Financing Options
- Marketing Tactics
- Marketing Tactics Online
- Marketing Tactics To Build Your Buyers List
- Negotiation Tactics
- Property Valuation And Due Diligence
- Property Management
- Contracts And Agreements
Each video session has an accompanying audio with it. The Bonus section contains Documents section, and this contains all the agreements needed to make offers and get the property under contract, including:
- Assignment of Lease With Landlord Consent
- Master Lease
- Option Agreement
- Property Management Agreement
- Release of Option
- Sample Phase I Environmental Report
- Letter of Intent
- Assignment of Option Agreement
- MLO Postcard Template
Also in the Bonus section is a Commercial Real Estate Research area, which used to contain links to websites that were marginally useful, but now contains the actual pdfs of the Marcus and Millichap National Apartment Index research reports for each of the 44 cities across the country that they cover. This is now “really” useful!
Also in the Bonus section is an audio interview with a successful student, and the RUBS Report (which stands for Ratio Utility Billing System), a 7 page pdf that shows you how to sub-meter a master metered building so you can get each tenant paying for exactly the amount of water and power they use. Vendors who will implement this for you are provided in the report.
Next to the Bonus section there is an area for the MLO Valuator. In the earlier version of this product, this software came with the course. It was quite useful software and enabled you to put all the data on the property in one place, and look at it in all sorts of different ways to do your deal analysis. Now though, instead of a download link there is a link to a sales page where you need to pay $197 to buy it. Oh well. If you do buy the software, the tutorial videos for it are also in the section and are quite detailed.
This product is simple enough for a complete beginner to take and implement, and create profitable results. All of the important aspects of Master Lease Options are well explained in easy to understand fashion, and Susan Lassiter-Lyons delivers the information in a pleasing upbeat manner. This is helped by the fact MLO’s themselves simplify the apartment buying process, and create the ideal entry point for aspiring commercial real estate entrepreneurs.
If you are looking for a more advanced treatment of the subject, this may not be the course for you. Indeed, some subject areas, like property management for example, didn’t go the amount of detail that you would need to really master this important part of the process. This is not a shortcoming of the course, the Author covers the basics well enough to understand how to approach property management. However if you wanted more detailed instruction you would need another training.
This course is clearly aimed at the beginning to intermediate level real estate entrepreneur.
My experience in using the Master Lease Option Method has been quite positive. Even though I was already aware of this approach to doing apartment deals, I found the training to be very well laid out and clearly explained, and the tools provided for analyzing deals were actually quite useful.
Does what she teach you in this course work? When I first purchased the product there was a single testimonial, a fellow who had bought the course and then gone and done 24 MLO assignments on small apartment properties. Great stuff, and the amount of money he made from those deals would have changed the financial footing of his life. Whereas previously he may have been working a job, now with his new skills he is an apartment entrepreneur and free to create wealth in whatever quantity serves his life.
But this was only one person, and I was never sure if he was a Susan “evangelist”, or not. Well, it’s twelve months later and I thought I would check back into the Testimonials section of the MLOM back office. There are four testimonials there now, all pretty compelling, including a fellow who created a $1.8M spread on a larger property. “Millionaires” are being created here. Not bad.
If they are any shortcomings of the course, they were only minor, although there a couple in my view. One was in the advice about generating dealflow. It seemed to be based around internet applications, which tend to have short useful lives due to overuse once everyone finds out about them. Much more effective is direct mail done repetitively; I was happy to see the postcard template has been added, so possibly SLL is aware of this and addressing it as time goes by.
Indeed, I was happy to see the improvements made to this product from twelve months ago with the removal of some videos which you could easily have called “filler”, and were only marginally useful, with the information in the research section which is actually genuinely and authentically useful. It seems this product is improving as time goes by.
If you are starting out in apartment investing the Master Lease Option is low risk, high leverage (in a good way), high return way to put you in the driver’s seat of a deal, and give you the opportunity to capture the tremendous profits that are available with apartment investing. With the Master Lease Option Method you have a very good product that walks you through the entire process, and gives you all the tools you need to do your first deal.
As you see with the video above, I own a copy of this product and having listened to it regularly and learned from it myself, can give it my full recommendation as a product you to buy, and use as a roadmap to put together your first apartment deal using a Master Lease Option.
If you are thinking about getting into apartment investing, this product represents a very good opportunity to get started.