CASE STUDY NO. 4
Situation: A General Contractor Investor( GCI) owns two acres of prime residential real estate, free and clear, with no loans or liens against the property. The land had already been successfully subdivided, entitlements are all in place, architectural drawings and plans are 100 % complete for all the SFRs. Further, the GCI has already arranged a construction loan with a major bank for all the new houses, to be built oneafteranother, in a series. The only thing left to do, prior to starting work, is to pay for the permits on the first few houses. modest amount still due, which the court ruled in this case had to be paid off completely before Probate could close. Once probate closed, then the four beneficiaries could each receive their respective sixfigure proceeds.
Problem: To say that the four heirs to the estate did not get along well would be an understatement. There was apparently longstanding bad blood between several different family members. The result is that, because of a total lack of trust, none of them could or would agree to pay off the amount due on the mortgage. It was a financial standoff.
Problem: The wife of the GCI recently filed for divorce, tying up all the CGI’ s assets, including the funds he had previously put aside to pay for the permits.
Solution: A STEF was brought in to provide funds for the permits. The STEF was provided with collateral via liens against the lots the CGI owned free and clear. Based on that, the STEF fronted the money for the permits, which had already been previously approved. By prearrangement, the bank providing the construction loan had agreed to“ overfund” the construction loan in order to provide payback to the STEF for the funding they provided + the STEF’ s markup. That same day, the loan got funded and the permits were issued. Construction soon got underway. It all turned out OK at the end for all parties.
CASE STUDY NO. 5
Situation: A property was part of an estate. The owner died and the property went into Probate. While the property had a lot of equity in it, there was still an outstanding first mortgage with a
Solution: A STEF was referred into the situation by an attorney. The STEF provided sufficient capital to pay off the one remaining encumbrance: the first loan. Probate was able to close; the heirs got their money and STEF was paid off for its investment + standard markup. All parties walked away with a smile on their respective faces.
CASE STUDY NO. 6
Situation: A successful REI Pro owned several commercial and industrial properties free and clear. He recently identified an investment property he wanted to buy from a distressed seller. The REI Pro calculated that he could turn right around and immediately sell the property for a handsome profit, since it came with an extraordinary amount of equity. The REI Pro had the property under contract. Further, the REI Pro had already lined up a cash buyer to purchase the property. The buy and sell would only take one day to successfully accomplish, best case scenario.
Problem: The REI Pro, at that time, was“ asset rich and cash poor”. He had no ready cash to use to buy the investment property he wanted to immediately flip. To further complicate things, he had recently defaulted on a bank loan, which had caused his FICO score to plummet. Due to the hit on his credit score, no banks in the area were willing to loan him the money he needed to buy the equityrich property he had his eye on.
Solution: A STEF was brought into the picture who fronted the purchase price, once the REI Pro pledged several properties he owned in order to crosscollateralize the deal. It all wrapped up to everyone’ s satisfaction.
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