Creative Structures That Work: Wraps, Master Leases & Options in Commercial Real Estate

Subtitle: How dealmakers close big without banks, big cash, or big risk.

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🧩 Why Creative Structures Matter

Commercial deals don’t always fit the bank’s box.

• Seller owes more than the property’s worth.
• Building is half-vacant and won’t appraise.
• Buyer has strong strategy but limited cash.

👉 Creative structures bridge the gap — turning “dead” deals into win-wins.

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🔄 Wraparound Mortgages (Wraps)

Definition: You create a new mortgage that “wraps” around the seller’s existing loan.

• Buyer pays you (the investor).
• You keep part of that spread and pay the seller’s bank.

Scenario:

• Seller’s loan: $900K @ 4%.
• You sell to end-buyer for $1.2M @ 6%.
• End-buyer pays $7,200/mo → you pay seller’s bank $5,200/mo → keep $2,000 spread.

Metaphor: Like wrapping a gift — the original box (loan) is still inside, but you’ve added a new layer of value.

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🏢 Master Leases

Definition: Lease the entire property from the owner, then sublease to tenants.

• You control cash flow without owning title.
• Often includes an option to buy later.

Scenario:

• 50,000 sq ft warehouse, 40% vacant.
• Owner stressed, losing money.
• You sign master lease at $20K/mo.
• Sublease to tenants for $30K/mo → profit $10K/month + option to buy at fixed price.

Metaphor: Like renting a hotel, then running it as an Airbnb → you control the income without owning the building.

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📝 Options in CRE

Definition: The right (not obligation) to buy a property at a set price within a time period.

• Gives you control with minimal capital.
• Often paired with lease or master lease.

Scenario:

• Office building worth $5M, struggling with occupancy.
• You negotiate option to buy at $5M within 3 years.
• During 3 years, you help stabilize occupancy.
• When NOI rises, building value jumps to $7M.
• You exercise option → instant equity.

Metaphor: Like a call option in stocks — you lock in today’s price while betting on tomorrow’s upside.

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🎭 Investor’s Theater: Choosing the Right Role

• Wraps = the investor plays banker.
• Master Lease = the investor plays manager.
• Options = the investor plays strategist.

👉 Each structure is a different character role in the same play — you choose the one that matches the scene.

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🧠 Investor’s Lesson

Creative structures aren’t loopholes — they’re tools.

• Wraps create spreads.
• Master leases create control.
• Options create leverage.

With the right structure, “impossible” deals become possible.

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📣 Call-to-Action

👉 Want templates for wrap contracts, master leases, and option agreements?
Download the kit now at SubjectToDeals.com/Commercial