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TIPS FOR MAKING MONEY WITH REAL ESTATE YOU DON'T OWN
Written by: Tyler HicksArticle Overview: Using a "sandwich lease" to make profits in real estate deals
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TIPS FOR MAKING MONEY WITH REAL ESTATE YOU DON'T OWN
TIPS FOR MAKING MONEY WITH REAL ESTATE YOU DON'T OWN
CAN YOU MAKE MONEY IN REAL ESTATE WITHOUT OWNING IT? Yes, you can! And just how do you do this? Here are the steps you take:
1. You lease space from an owner, planning to sublet this space to another firm or person
2. You charge your sublet firm (called a tenant-sublessee) more than you pay the
owner for the space you lease
3. You earn money on the difference between the amount you pay to lease the space and the rent you charge your tenant
4. You are careful to include in your lease your right to sublet the space to another tenant
WHERE CAN YOU USE THIS METHOD FOR MAKING REAL ESTATE MONEY WITHOUT OWNING? This method is called a sandwich lease because you're in the middle--between the owner and your sublet tenant. You can use this method:
1. In any large-city location for property that's needed by companies of various types. Such companies usually don't want to own property; they want to rent
2. For office floors, industrial warehouses, commercial stores, and sports complexes--bowling alleys, swimming pools, billiard rooms, etc.
3. For offering shorter-term leases than the owner might require to rent the space. Thus, you might offer a 5-year lease on your sublet space when the owner requires a 10-year lease. You lease for 10 years and sublet for 5 years, hoping (or knowing) that you can sublet again for another 5 years to the same company, or to another one when the first lease runs out
HOW CAN YOU MAKE MONEY IN THIS BUSINESS? Here's an example drawn on real numbers in today's office market for renting office space and subletting it:
1. You pay to lease a full floor in an office building at the rate of $100,000 per year
2. You sublet this same space for 15% more, or $115,000 per year on a net, net, net basis, which
means your sublet firm pays any increase in real estate taxes, insurance, or maintenance
3. Your income is free of any cost increases--so you have "pure" money each year amounting to
$115,000 - $100,000 = $15,000. With 10 such floors your annual income would be 10 X $15,000
= $150,000 a year.
A SANDWICH LEASE CAN MAKE YOU RICH IN REAL ESTATE. Just work one in a city where space is needed for business. You might become a real estate tycoon without owning a square inch of land!
Contribution
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The Real Road to Wealth in Real Estate
Real Estate Commercial Loans?
Cash Flow for Real Estate Investors
Article Tags: 10 years, billiard rooms, bowling alleys, city location, industrial warehouses, insurance, making money, office floors, real estate taxes, real numbers, renting office space, sandwich, sports complexes, swimming pools, term leases
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About the Author: Tyler Hicks RSS for Tyler's articles - Visit Tyler's website  Click here to visit Tyler's website   TIPS FOR MAKING MONEY WITH REAL ESTATE YOU DONT OWN SUCCEED WITHOUT TONS OF EXPERIENCE USE LETTERS OF CREDIT LCs TO GET FINANCING HOW TO MAKE BIG MONEY ON A SATURDAY MORNING How and Where to Get Loans to Build Your Real Estate Wealth by Tyler G Hicks Part II |
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