Where Do I Get an MLO?

Posted on November 9, 2016 by

I have been asked the same question a few times lately so I decided to answer it in this article. “Where can I get a master lease option (MLO) contract from?” The answer is easy- Google. You can search for MLO docs online. There were dozens of versions from just as many sites. I highly suggest that you have an attorney review any docs you get off line before using them. When I am asked this question I usually respond by telling the person that they aren’t really asking the right question. The real question is not “where do I find a MLO contract?” but “How do I use it?” You can print up the best master lease option document you can find but if you can’t get a seller to sign it…who cares?

Getting a seller on board with any kind of creative financing can be a challenge. You will find it a lot more difficult without the right presentation. Pitching your idea to the seller or realtor is the key to getting the deal done. Here are a few tips to make your next MLO offer a hit! 

  1. MLOs Solve Problems

    The best way to get your offer accepted is to know what problems the seller has. If the seller has no problems then they are not likely to accept a MLO offer. If a seller does have some issues then it is your job to identify what the issues are and then decide what would fix the problems. Now you need to show the seller how letting you take control of the asset with a master lease option would allow you to do all these things that will fix the problems. Basically you are going to do what the seller didn’t or couldn’t in exchange for an accepted MLO.

  2. Burned Out Landlord

    Is the seller “burned out”? This may be a great candidate for a MLO. When people are tired of dealing with real estate, an MLO is a great way for you to take control of the day to day operations and it solves the seller’s headache. This means you rent the property from the seller with the contract and keep the cash flow. If you don’t want to be a landlord- hire a manager!

  3. Get the Realtor Onboard 1st

    In a lot of cases you will be working through a realtor and not directly to an owner. This is not a problem at all if you handle the situation right. Most of my MLO contracts have come from listed properties. The first thing you need to do is to explain the problems with the property itself (likely the realtor will already know about these issues). Problems like deferred maintenance and low occupancy. Next you need to explain to the realtor how you will solve the properties problems and get the deal closed after the repairs or distress is mitigated.

  4. Get The Realtor Paid

    That’s the first thing that a realtor is going to want to know when you explain how a MLO works (if they don’t already know). There are lots of ways to pay a realtor for doing a MLO but here are a few of my favorites.

    1. Add them to the MLO contract. Have your attorney add a clause that states the agent gets their full commission when you exercise your Purchase Option.

    2. Add another clause that states that if you sell the property or the MLO contract to another buyer they will get that same commission.

    3. Add a clause that guarantees that they will be the listing agent if you relist the property for sale. Now they get a chance to sell the property twice!

  5. Know Your Contract

    One very important point in using a MLO is to understand the document yourself. Sounds funny but how often do you really sit around reading and memorizing contracts? When it comes to using this form of creative financing I would suggest you know the entire contract front to back. This will allow you to explain any of the clauses in it and also for you to educate the realtor or seller on how it works. You are here to solve problems so your confidence in making the offer and in the solution it brings is critical. If the seller wants to ask you about items in the contract and you can’t discuss them intelligently you will not come off as confident.

Keep in mind that a MLO contract is just a piece of paper. It’s no stronger than the person offering it. Be a problem solver using master lease options and you will be closing in no time!

Good Luck!

Bill Ham

Bill HamBill Ham has been investing in real estate for 8 years and has created a portfolio of nearly 400 apartment units in Macon, GA. He created his entire real estate investing portfolio using creative and seller financing.

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