The Benefits of a Master Lease Agreement with Option to Purchase


The majority of Mobile Home Parks in America are owned free and clear. There is no banker. How would you like to buy a property and not have to go to the bank to get a loan? How would you like to cut a deal where you do not have to have a down payment? Those are two wins I think for you.

As a newbie, you'd like to get the cash flow. If you had 50 units and you increase the rent $50 a month, you have $30,000 more income coming in each year. Would that be nice? Sure, would! It is a win-win deal and I like that. You benefit because you get the income, you get the upside, you get the capital appreciation, you get the opportunity to increase the value and you get all that because you set a fixed price in advance.

At the end of the master lease, or any time before the end of the master lease, if you want to exercise your option, you could. It is a wonderful way for you to get into a property with literally nothing down. I think it is great for you. I’m going to tell you point blank, the smart way to do this would be to do with a letter of intent. It’s a letter. “I want to Master Lease your mobile home park, I will do this, and you get this, it’s spelled out.

One of the great things about Mobile Home Parks is a lot of times, they have units that the park owns. It could cost you anywhere from $7,000 to $15,000- $25,000 to move a unit for one place the other 50 miles away if it's already had the wheels removed and it's a fix, is now real property, and it's no longer covered by the Department of Motor Vehicles. Now, it gets expensive to do it.

I have a mentee who specializes in Mobile Home Parks. She buys old neglected unit for $3,000, $4,000, maybe $5,000. She hires a handyman to come in and fix these units up. It will cost about $5,000, $6,000, $7,000 to fix one. Then she can sell it in place in the Park for $25,000. Would it be nice to pick up an extra $15,000 a quarter? For some people that replaces their J-O-B! I'm not saying you must do all that. I'm saying you can. It's an option and an opportunity. The benefits to you are tremendous.

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