In a LASH transaction, there are three parties:
1. The property owner, who is the landlord or lessor.
2. The tenant, who is the lessee and the sublessor.
3. The sublease tenant, who is the sublessee.
There is really nothing very complicated about how the LASH strategy works. It is nothing more than the old BLASH—buy low and sell higher—strategy applied to leasing. For example, when using the LASH strategy, a tenant or lessee signs a long-term (three- to five-year) flat-rate master lease with a landlord or lessor. The master lease agreement creates a leasehold estate, giving the tenant the right to possess, use, and sublease the property. Once the tenant subleases the property to a sublease tenant or sublessee, the tenant becomes a sublessor. In a LASH transaction, the tenant acts as a middleman, leasing the property directly from the owner and then subleasing it to a sublease tenant. To illustrate, let us suppose that a tenant has a $2,500 a month master lease on a small commercial property, which is subleased for $3,300 a month. The difference between what the tenant pays the landlord in rent and what is collected in sublease rent is the tenant's profit. In this case, the tenant's monthly LASH profit would be $800.
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