CASE STUDY NO . 10
Situation : An investor owned a rental property free and clear and wanted to buy a second rental property . The seller was an older gentleman who was tired of being a landlord and wanted to move out of state to be near his grown son and grandchildren . The property came with a good amount of equity , was cashflowing positively , but needed some cosmetic upgrades . The current tenants were OK with the change in ownership .
Problem : Due to recent financial issues , the investor lacked the Down Payment ( DP ) money for the property he wanted to buy , but could easily afford the monthly payments on a new loan , based on the projected positive income streams from both rental properties .
Problem : The property was burdened with several Clouded Title issues . Unless and until those CT problems could be solved , the seller was stuck due to a lack of money to pay them off , plus he had pretty bad credit . To make matters worse , if he did not sell the house very soon , he could lose it in a matter of weeks to creditors and receive no money at the end .
Solution : A commercial loan broker reached out to my firm for help . Once all the needed paperwork was set up properly , we agreed to fund the property purchase for the wholesaler . The amount we funded included enough money to pay off each of the CT debts that plagued the property . It took a few days to get clear title ; however , in the end , it was a winwin for all parties .
Solution : A mortgage broker ( who was financing the bulk of the purchase price ) suggested that the investor reach out to a STEF for the DP money , using the equity from the first property as security via crosscollateralization . The exit strategy money ( to pay off the STEF ) came from a first position mortgage the investor secured from the broker . The lender agreed to “ overfund ” the loan enough to pay off the STEF ( DP money + 50 % markup ). The bank was happy to overfund the loan because the investor pledged both properties as collateral .
CASE STUDY NO . 11
Situation : A wholesaler had a property that he wanted to micro flip via a double close . The good news is that it came with a good amount of equity in it , and he had a cash buyer lined up , ready to go via a double close . ( It could not be done via an assignment because , like a growing number of states , assignments are illegal in the state where the property was located .)
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Tod Snodgrass
President Creative Transaction Funding , LLC Providing Down Payment Assistance & ShortTerm Equity Financing to investors , nationwide . https :// creativetransactionfunding . com
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