377. I'm Building 43,000 SF of Flex Space at 1/3rd of The Cost - Office Hours

About this episode

Tyler Cauble discusses his innovative approach to building flex space using a master lease strategy to significantly reduce costs.

Core Concept Instead of buying land + building ground‑up flex , Tyler uses a master lease on an existing 43K SF building. Traditional build: $6–8M ($150/SF). His deal: $2.5M all‑in ($39/SF hard costs) by leasing + converting , not buying. What a Master Lease Is You lease the whole property from the owner and sublease to tenants . Your profit = rent spread (sublease income – master lease payment). You control the income and operations without owning the dirt. Works across flex/industrial, retail, office, mixed‑use, even hotels . When It Makes Sense Owner won’t sell at your price but needs income. Building needs capex the owner won’t/can’t fund (vacant or tired asset). You want to control more SF with less upfront equity (no big 20–30% down payment). Peerless Mill Example 43,350 SF warehouse → ~ 24 flex units . Master lease: $0 base rent + 10% of revenue to owner. Capex: ~ $2.5M total vs. $6–8M if built new. Hold: 20 years , targeted: ~ 13% LP IRR ~ 4x equity multiple ~ 19% annual cash‑on‑cash Tax & Risk Highlights Treated as an operating business , with large bonus depreciation potential (deal‑ and CPA‑dependent). Key risks: You carry operating + lease‑up risk . You don’t own…

People in this episode

Host: Tyler Cauble

Topics covered

• flex space
• master lease
• real estate investing
• cost reduction
• property management

Keywords

• flex space
• master lease
• real estate
• investment strategy
• cost savings
• subleasing
• operating business
• capex

Mentioned in this episode

Organizations: Peerless Mill

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