I recently sat down with a property owner who was about to become a landlord unexpectedly. You’d be surprised how often this happens. Their scenarios range from inheriting property to going through a divorce or even just experiencing a job transfer. This particular owner falls into the last category. He’s being deployed overseas and received about a months’ notice.
Like I said — unexpected landlord.
Before I get too far into this one, I have to tell you how impressed I am with our men and women who serve our military. I was sitting there with this career serviceman who was about to go on active duty in a place where hazard pay is warranted (that should tell you something).
Neither the potential danger of the place he was going, nor the fact people would be shooting at him seemed to faze him. Instead, his main worry was about making sure his house was taken care of while he was gone.
I can’t quite get my head around just how mentally prepared this man was to go serve our country. Although he was very aware of the threats that awaited him, he was more worried about his house than personal danger. There’s only one way to describe this: They call it Army Strong, and I stand in awe.
As we sat at his kitchen table, I looked him in the eye and told him I would take care of his property like it was one of my own while he was gone. That seemed to make the worry melt away.
The deal structure I’m doing with this homeowner-turned-landlord is called a master lease. That’s where a property owner leases a house to an investor who has the right to sublease it to a tenant. The investor then makes a spread between the market rent rate the occupant pays and what he has agreed to pay the landlord. If you’re new to investing, this is a great way for you to start receiving rental income without owning property. To learn more about that, check out this previous post on why master leasing makes sense.
Our property owner received a number of benefits by going with us. And as you will see, this is what I meant by treating his house like one of our own.
First of all, his kitchen and dining area needed flooring installed. He didn’t know what to get or who to install it. Nor did he have time to coordinate all that. I went and picked out the vinyl and had my floor man install for him.
Next, the house needed pressure washing. We had that done, too. By the way, we had both of these things done at our prices. You see, we do a lot of rehabs each year, and we receive cheaper pricing than homeowners, both on materials and labor. I passed those savings on to the owner.
Also, our serviceman ran out of time packing before he had to report to the base he was being deployed from. To help out, we sent some of our office staff, Lucas and Marybeth, over to finish packing his house for him. We literally went and got boxes; Marybeth packed his cabinets, and Lucas moved it all into the garage for easy pickup when owner was on leave.
Just to be clear, we did this at cost. We did not add a fee for managing these extra benefits. We also didn’t charge anything up front. Instead, I agreed to take those expenses out of the rent, thus easing the financial burden on our owner.
Now, I’m not going to say we could do all this on every master lease, but on this one, well … my team and I counted it as a privilege to serve someone who is going off to serve our country. And we were happy to do it.
Joe and Ashley English buy houses and mobile homes in Northwest Georgia. For more information or to ask a question, go to www.cashflowwithjoe.com or call Joe at 678-986-6813.