Ever heard of Structure Stacking? Ever seen it in action?
Many real estate investors use deal structuring tools like Owner Carry, Wrap Mortgages, Subject-to Deals, Master Leasing, and Pure Options, but here’s something to consider: When structuring advanced creative deals in the real world, rarely do we use just ONE of these tools by itself.
For example, Kim and I recently helped an investor construct the following offer to a serious don’t-wanter seller.
The seller inherited his uncle’s single-family rental. It has an existing tenant. Because the seller has no experience being a landlord, and because everyone around him is telling him one tenant horror story after another, he wants to be shed of his uncle’s house and tenant as soon as possible. Selling tomorrow is not soon enough for this seller!
The home is in good shape. It needs no work.
Here’s some important information about this property:
- Fair market value is $310,000
- 30-year mortgage secured to the property in the deceased uncle’s name. It has 25 years left.
- Current mortgage balance is $181,473.20
- Monthly payments (P&I) are $978.03 at 4.2% interest and are current
- Market rents in the neighborhood are $2,700
- Rent on uncle’s property is $2,500 per month and is current
Here’s some important information about the seller:
- He would like some money from the sale to pay off about $25,000 in credit card debt.
- He doesn’t care whether the deceased uncle’s mortgage is paid off at closing or not.
- He likes the idea of receiving monthly mailbox money.
- He would like to get rid of his uncle’s rental house ASAP.
Given this seller’s situation – his pain points – how would YOU structure your offer?
This is the offer Kim and I made with the goal of solving the seller’s real estate problems. Does it match the offer you would make in this situation?
Our offer to the seller:
- We will pay $310,000 for the property (full market value).
- We will buy the property subject-to the uncle’s 4.3% interest mortgage, with monthly payments of $978.03 (P&I), with a balance of $181,473.20, with 25 years left to pay.
- We will give the seller $25,000 down at closing.
- We will give the seller a Purchase Money Note in the amount of $103,526.80 and make 207 monthly payments of $500.
- We will close in 14 days and pay all closing costs.
Remember Structure Stacking? Here are just a few of the creative deal structuring tools used to make this single deal happen:
- Subject-to Deal
- Owner Carry Deal
- Power of Attorney
- Estopple letters from the uncle’s lender and tenant
- Lease Modification Agreement
See what I mean? Rarely, when making creative offers in the real world, do you use just one creative deal structuring tool.
One question you may be asking is how did we learn to creatively structure deals using Structure Stacking? Answer: Think of layers of a cake. In 1990, we learned how to do Owner Financing. In 1997, we learned about Lease Modifications. In 1998, we learned how to do Subject-to Deals and use Powers of Attorney. Also in 1998, we did our first Structure Stacking deal. In 1999, we learned how to use Estopple letters.
In other words, in past years, we learned how to use each of the creative tools used to make this deal possible.
To learn about Structure Stacking, we teach a two-day ADVANCED deal structuring course called What Box?. When you take this course, you’ll not only see deals like this one in action, you’ll also see the deals behind the deal that gave us the know how to make advanced Structure Stacking offers.
CLICK HERE for more information about the What Box? Seminar: https://billandkimcook.com/what-box-seminar/
