Setting up a master lease deal lets you sublease a property at a profit. To successfully put together this sort of deal, choose your properties carefully, draw up good master leases, and work hard to ensure that the property owner is very happy with the arrangement you have made.

Some private real estate investors who are worried about property ownership in today’s market are arranging master leases that allow them to sublet a property on a room-by-room basis to students and to tenants with special needs. These investors furnish the properties, arrange utilities and rent by the month or week. After they have paid their own rent to the property owner, they are often able to realize a nice profit without having to worry about property taxes, mortgages, insurance, and the other hassles of owning a property.

Private real estate investors interested in finding such a real estate deal can be successful in getting great profits if they:

• Find the right property. A vacant property is a great option, especially when the owner lives out of state. Such a vacant property is often a liability to the owner, who must pay for taxes, insurance and other costs on the real estate while worrying about vandals and other problems. By offering to sublease the property you ensure that the owner gets some money for the property and enjoys some peace of mind as well. Many municipalities and counties keep lists of vacant properties and these lists are a great place to start your search. Look for properties that are near universities – so that you can rent to students – or near amenities that would appeal to special needs tenants.

§ Contact owners and set up a master lease on a property you think you could sublease out. Consider getting purchase-options on at least one of these properties so that you can eventually become a property owner when the market changes or when you get more comfortable with the idea.

§ Try to set up the master lease for as long a period of time as possible. Try to create a contract that would allow you to renew the lease at specific annual increases in rents. This sort of property deal is for the long term.

§ Look for properties that don’t need much work. That way, you don’t have to start out in the red. If a property does need some clean-up consider covering the initial cost and then deduct it from what you owe the property owner. You can subtract a certain amount of the rents to cover costs. You can also offer to split the costs of the renovations.

§ Make sure that the master lease describes everyone’s duties. In most cases, you will want to make sure that the property owner is the one who is responsible for capital expenditures, taxes, and insurance. Minor repairs – such as paint jobs and cracked linoleum – would be your responsibility in many cases

§ Take care of the property carefully. Screen tenants and inspect the property once on a while to make sure that everything is in good repair. Your goal is to make the property owner happy, and that means no hassles and no damage to the property. This way, when you look for new master lease deals, the property owner will be happy to vouch for your professionalism over all other private real estate investors.

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