What master lease means in practice
A master lease lets an operator run a property they do not own, paying the owner a fixed amount and keeping the difference between that and what the rooms produce. The operator carries the vacancy risk on every empty bedroom. The arrangement normally requires the owner’s written permission to sublet plus compliance with local subletting, licensing, insurance, and occupancy rules, so confirm the structure with counsel before signing.
Example
An operator pays an owner $1,700 per month for a four-bedroom house and rents the four bedrooms individually, absorbing any month where a room sits empty.