Abby Howard: Master Leasing — Risk Versus Reward

by Katie Sloan

The international student population was shaken with recent events surrounding a master lease fiasco in markets across the U.S. Dozens of students from China are facing issues of late payments, outrageous fines and possible eviction because their master lease holder simply stopped paying rent. The students are left confused and outraged, and the properties’ hands are tied. It has become abundantly clear that this topic needs to be brought to light; not just for the students, but for the the properties as well.

Master leasing, in theory, seems like a no-brainer. In the world of student housing, property managers are often faced with slow leasing seasons, missed pre-lease goals, and lengthy calls with owners and investors discussing ways to drive more traffic and sign more leases. Amidst the property events, on-campus marketing, giveaways, social media contests, rent concessions, etc. property managers are often left wondering what else they can do.

Master leasing seems like an easy way to fill several units at once and get ahead of grueling leasing goals. With owner calls looming, imagine receiving a call from a company that wants to lease five, 10 or 20 units. The company will be the lease holder, fill the units, roommate match, set up the utilities and pay the rent. It seems too good to be true — but is it safe and legitimate? What is the risk?

When considering a master lease, it is important to fully understand the risk and not just the reward. As recent events demonstrate, the master lease holder defaulting on the contract ultimately leads to evicting innocent students, loss of revenue and a stained reputation. It is unclear if master lease risks can ever be completely mitigated, but taking a few simple steps could positively impact a property’s master lease experience while reducing exposure to unnecessary risk.

  • Step one: Understanding exactly who is signing the lease is crucial. Always follow proper screening measures when signing a master lease to ensure the company is established and in good standing with other locations. Ask for three or more property references and call them! This will go a long way in learning about the company and the types of relationships they have cultivated in the student housing community.
  • Step two: Building a strong relationship with the students, as well as the master lease holder, is imperative. Require the company to provide a list of the resident names, unit numbers and contact information. This will also come in handy when considering maintenance requests, package pick-ups, etc.
  • Step three: A way to ensure safety is charging the master lease holder an upfront deposit of two months rent. Not only will this confirm the company has the funds, but also will be a cushion in case there are any issues with payment down the road. Insist the funds be deposited prior to students being allowed to move-in.
  • Step four: To avoid late or missed payments, require the company to set up automatic recurring payments via the resident portal. This seems like an easy one, but often gets overlooked when dealing with a company rather than the traditional resident.

Uhomes, an international student housing locator, utilizes master leases at properties in high demand markets in the U.S., and has felt the blow-back from the aforementioned recent events. Uhomes has begun developing and implementing structure and processes at all of our master lease properties to ensure both the students and suppliers feel confident and comfortable. Uhomes currently provides all student information including passport and I-20 documentation, pays increased deposits of up to two months rent and has a team located in the U.S. to help on-site staff facilitate move-in and move-out procedures.

There is no question that increased structure and security should be required going forward when a property considers master leasing. Uhomes will continue to expand their operations and diversify themselves to ensure the students and suppliers feel confident that in their partnership there is minimal risk and much reward.

Abby Howard is currently the U.S. operations director at Uhomes, a long-term booking platform for Chinese students to find their home away from home while studying in other countries. Howard has also worked on-site at a student housing complex as both the sales and marketing manager and assistant general manager. 

You may also like