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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