cooperation of the current occupant ) a cashforkeys arrangement , as well as funds for cosmetic upgrades ( paint , minor repairs ) so they could rent the house out to a qualified new tenant . However , all of the REI Pro ’ s money was tied up in other deals .
Solution : The new owner arranged for a refi with the same broker who brought us the deal . We provided the needed capital to the REI Pro . Shortly thereafter , the proceeds of the refi were used to pay back the amount we funded + our standard markup . The REI Pro was able to successfully rent the property to the new tenant less than one month later .
CASE STUDY NO . 3
11 Case Studies : Funding Examples
CASE STUDY NO . 1
Situation : A REI Pro does not have enough down payment ( DP ) money . He has a deal that meets the following criteria : the property is being purchased for 70 % or ARV = 30 % equity for the REI Pro ( 100 % 70 %). He has already lined up funding ( i . e . a hard money loan ) for the 70 %. The hard money lender requires that the REI Pro bring 25 % DP ( skininthegame ) money to the table .
Problem : The REI Pro only has 10 % DP available ; he needs 15 % DP Assistance ( 10 % + 15 % = 25 %).
Solution : Our firm , Creative Transaction Funding LLC , can provide the missing 15 % DP funding , assuming your deal meets our standard criteria . Our fee is 5 % of the ARV . The REI Pro ’ s profit equals 25 % ( 30 % 5 %) of the ARV .
CASE STUDY NO . 2
Situation : A loan broker sent us an experienced real estate investor professional ( REI Pro ) who had recently purchased a property via a judicial tax sale through a county Tax Claim Bureau . The house came with a lot of equity and clear title .
Problem : The “ hold over owner ” was still occupying the property . The REI Pro needed cash in order to facilitate ( with the
Situation : A homeowner has fallen way behind with his monthly mortgage payments due to the fact that he lost his job . The bank recently sent him a NOD ( Notice of Default ) and the property is now in preforeclosure status . With insufficient time to fix up the place and subsequently sell it for top dollar , the homeowner has come to realize that he needs to prepare to move away from the residence , sooner rather than later . He reaches out to a local real estate broker who in turn puts him in contact with a cash buyer investor ( REI Pro ) who is interested in purchasing the property — at a discounted price — via a double close ( involving two separate escrows ).
Problem : In addition to the overdue first position mortgage on the property , it is also encumbered with several liens : mechanics , HOA , property tax , as well as a lawsuit , including a lis pendens filing . The seller has no money to clear up the title , so it remains clouded , and the property remains unsold . Due to the highrisk factors involved , everyone ( including the cash buyer / REI Pro ) is , understandably , reluctant to front the money to pay off the liens beforehand . The homeowner is stuck .
Solution : Seeking a way out of his client ’ s deteriorating financial situation , the broker reaches out to a ShortTerm Equity Financing source for help with paying off the liens , which created the clouded title logjam in the first place . Once all the pieces of the financial puzzle are properly in place ( agreements and contracts signed , proper escrow instructions prepared , all monies needed for the deal are sent into both escrows ), both closings can occur pretty quickly .
The property owner came out OK ; the REI Pro got the property at a good discount from FMV ; the STEF was amply rewarded for its involvement ; and last but not least , the broker earned a 5 % referral fee from the STEF ( based on the amount that the STEF funded ) for their time , trouble and expertise .
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