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

Page: https://stenobird.com/podcast/the-commercial-real-estate-investor-podcast-1247143/377-i-m-building-43-000-sf-of-flex-space-at-1-3rd-of-the-cost-office-hours
Text version: https://stenobird.com/podcast/the-commercial-real-estate-investor-podcast-1247143/377-i-m-building-43-000-sf-of-flex-space-at-1-3rd-of-the-cost-office-hours.md
Podcast: [The Commercial Real Estate Investor Podcast](https://stenobird.com/podcast/the-commercial-real-estate-investor-podcast-1247143)
Published: 2026-05-07T10:00:00+00:00
Episode link: https://www.tylercauble.com/podcast/episode377
Audio file: https://static1.squarespace.com/static/5c115fec9d5abbba78a23c93/t/69fa4b72e628660d2f8ca36e/1778268051951/I_m+Building+43%2C000+SF+of+Flex+Space+at+1_3rd+of+The+Cost.mp3
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Duration seconds: 2193

## Resource

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 the real estate —exit is business/lease focused. Long‑term commitment , so structure terms (rent, maintenance, termination) carefully.

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