<p data-rte-preserve-empty="true" style="white-space:pre-wrap;"><strong>Core Concept</strong></p><p class="" data-rte-preserve-empty="true" style="white-space:pre-wrap;">Instead of <strong>buying land + building ground‑up flex</strong>, Tyler uses a <strong>master lease</strong> on an existing 43K SF building.</p><p class="" data-rte-preserve-empty="true" style="white-space:pre-wrap;"><strong>Traditional build:</strong> $6–8M ($150/SF).</p><p class="" data-rte-preserve-empty="true" style="white-space:pre-wrap;"><strong>His deal:</strong> $2.5M all‑in ($39/SF hard costs) by <strong>leasing + converting</strong>, not buying.</p><p class="" data-rte-preserve-empty="true" style="white-space:pre-wrap;"><strong>What a Master Lease Is</strong></p><p class="" data-rte-preserve-empty="true" style="white-space:pre-wrap;">You <strong>lease the whole property</strong> from the owner and <strong>sublease to tenants</strong>.</p><p class="" data-rte-preserve-empty="true" style="white-space:pre-wrap;">Your profit = <strong>rent spread</strong> (sublease income – master lease payment).</p><p class="" data-rte-preserve-empty="true" style="white-space:pre-wrap;">You <strong>control the income</strong> and operations without owning the dirt.</p><p class="" data-rte-preserve-empty="true" style="white-space:pre-wrap;">Works across <strong>flex/industrial, retail, office, mixed‑use, even hotels</strong>.</p><p class="" data-rte-preserve-empty="true" style="white-space:pre-wrap;"><strong>When It Makes Sense</strong></p><p class="" data-rte-preserve-empty="true" style="white-space:pre-wrap;"><strong>Owner won’t sell at your price but needs income.</strong></p><p class="" data-rte-preserve-empty="true" style="white-space:pre-wrap;"><strong>Building needs capex</strong> the owner won’t/can’t fund (vacant or tired asset).</p><p class="" data-rte-preserve-empty="true" style="white-space:pre-wrap;">You want to <strong>control more SF with less upfront equity</strong> (no big 20–30% down payment).</p><p class="" data-rte-preserve-empty="true" style="white-space:pre-wrap;"><strong>Peerless Mill Example</strong></p><p class="" data-rte-preserve-empty="true" style="white-space:pre-wrap;"><strong>43,350 SF</strong> warehouse → ~<strong>24 flex units</strong>.</p><p class="" data-rte-preserve-empty="true" style="white-space:pre-wrap;"><strong>Master lease:</strong> <strong>$0 base rent + 10% of revenue</strong> to owner.</p><p class="" data-rte-preserve-empty="true" style="white-space:pre-wrap;"><strong>Capex:</strong> ~<strong>$2.5M</strong> total vs. $6–8M if built new.</p><p class="" data-rte-preserve-empty="true" style="white-space:pre-wrap;"><strong>Hold:</strong> <strong>20 years</strong>, targeted:</p><p class="" data-rte-preserve-empty="true" style="white-space:pre-wrap;">~<strong>13% LP IRR</strong></p><p class="" data-rte-preserve-empty="true" style="white-space:pre-wrap;">~<strong>4x equity multiple</strong></p><p class="" data-rte-preserve-empty="true" style="white-space:pre-wrap;">~<strong>19% annual cash‑on‑cash</strong></p><p class="" data-rte-preserve-empty="true" style="white-space:pre-wrap;"><strong>Tax &amp; Risk Highlights</strong></p><p class="" data-rte-preserve-empty="true" style="white-space:pre-wrap;">Treated as an <strong>operating business</strong>, with large <strong>bonus depreciation</strong> potential (deal‑ and CPA‑dependent).</p><p class="" data-rte-preserve-empty="true" style="white-space:pre-wrap;">Key risks:</p><p class="" data-rte-preserve-empty="true" style="white-space:pre-wrap;">You carry <strong>operating + lease‑up risk</strong>.</p><p class="" data-rte-preserve-empty="true" style="white-space:pre-wrap;">You <strong>don’t own the real estate</strong>—exit is business/lease focused.</p><p class="" data-rte-preserve-empty="true" style="white-space:pre-wrap;"><strong>Long‑term commitment</strong>, so structure terms (rent, maintenance, termination) carefully.</p>