A client wants me to master lease three units. I've never been the tenant.

My crew has been doing turns and light maintenance for a couple of small landlords for three years. One of those landlords also owns a 12 unit near a regional headquarters, and a company that staffs that headquarters asked whether I could provide three furnished 1 beds on a rolling basis for their rotating people.

They don't want to deal with the landlord. They want one contract with me, one invoice, and the ability to swap who's in the unit without a new lease each time.

So the shape would be: I lease three units from the owner at $1,300 each, unfurnished, on 24 month terms. I furnish them, maybe $8,500 a unit. I carry utilities and internet, roughly $230 each. I bill the staffing company $2,450 per unit per month while occupied.

Occupied is the whole question. Their letter says they expect "substantially continuous" need and they will not commit to a minimum. I'd be on the hook for $3,900 a month in rent whether anyone shows up or not, plus $25,500 in furniture that would be sitting in units I'm paying for.

What I actually want is a minimum term or a take-or-pay on at least two of the three units. I don't know if asking for that is normal or if it makes me look like I can't handle the business. And I don't know what I should be looking at on their end before I sign anything with a company I've only emailed with.

2 replies

1dmitri_v6CapitalPRO6

Asking for a minimum is completely normal and any corporate housing operator with a real book asks for it. What you're describing is you taking 100 percent of the vacancy risk on a promise that uses the word "substantially" and commits to nothing. That word does no work in a dispute.

Two things I'd read for. First, who is the signing entity. A staffing company often has a thin operating entity sitting under a parent, and "substantially continuous" from an entity with no assets is worth what it costs them to say. Ask for the entity name and look at what it actually is. Second, the termination clause. Thirty days notice on their side against your 24 month obligation to the owner is a 23 month gap you're standing in.

If they won't give a minimum, the other lever is matching your downside to theirs. Ask the owner for a shorter initial term, or a clause letting you hand back the third unit. You want your two contracts to breathe together. Have a lawyer in your state look at the pair of them before you sign, because the master lease and the corporate agreement need to be read against each other and that is not a DIY job.

1bmoreno23AB1B

I'm new to all this, and the number that made me pause was $25,500 of furniture in units you don't own. If it goes wrong, can you get it out? Who pays for the truck, and does the owner's lease say anything about property left in the unit? Feels like the kind of thing that turns into an argument at exactly the moment you have no money.

A client wants me to master lease three units. I've never been the tenant.

2 replies