CASE STUDYIllustrative Example

Case Study: Structured Control

An illustrative example for educational purposes.

All numbers and details are illustrative only.

Deal Snapshot

• Asset Type: 8-Unit Multifamily
• Market: Southeast Metro Area
• Objective: Control → Stabilize → Refinance
• Strategy: Master Lease Option with Purchase Option
• Timeline: 24 Months
• Primary Constraint: Seller wanted passive income, no management

Initial Situation

Property at 62% occupancy with deferred maintenance. Seller was a passive investor tired of management. Conventional financing unavailable due to condition.

• Occupancy: 62% (5/8 units)
• NOI: $18,400/year
• As-Is Value: $425,000
• Market Value: $680,000 (stabilized)

Structure (Terms)

• Agreement: Master Lease Option
• Term: 24 months
• Monthly Payment: $3,200 (below market rent)
• Option Fee: $25,000 (credited at closing)
• Purchase Price: $520,000 (公式)
• Operating: Operator handles all management
• CapEx: $40,000 budget, operator-funded

Risk Controls

• Stress-test: 50% occupancy coverage required
• Reserve: 2 months payments held in escrow
• Screening: 650 credit minimum, 3x rent income
• Insurance: Landlord policy required
• Default: 10-day cure period

Stabilization Plan

0-90 Days

Turn vacant units. Standardize leases. Improve curb appeal.

90-180 Days

Rent normalization. Collections process. Maintenance protocol.

180-365 Days

Refinance readiness. NOI optimization. Option exercise decision.

Measured Results

• Occupancy: 62% → 88%
• NOI: $18,400 → $52,000
• Cash Flow: ($800)/mo → $2,400/mo
• Exit: Refinanced at 18 months

Lessons

• Control before ownership reduces exposure
• Terms alignment creates seller cooperation
• Conservative underwriting protects the structure
• Optionality preserves strategic flexibility

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Educational and advisory services only. Not legal advice, tax advice, or financial advice. Consult licensed professionals.