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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Sincerely,
Tod Snodgrass
President Creative Transaction Funding, LLC Providing Down Payment Assistance & ShortTerm Equity Financing to investors, nationwide. https:// creativetransactionfunding. com
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