What is Structure Stacking?

Experienced real estate investors rely on advanced creative deal structuring to help make impossible deals profitable.  Often a technique called Structure Stacking comes into play.

What is Structure Stacking?  It’s when two or more creative deal structuring tools are used together to make a single transaction possible.

Most folks who got into real estate investing after 2012, know little about creative deal making.

Why is this?  Since 2012, real estate has rapidly appreciated, mortgage interest rates have dropped to all-time lows, there’s been a huge shortage of single-family homes, and rents have shot up like a rocket.

Real estate investing, under these conditions, takes no brain power nor much deal structuring skill to succeed.  Buy a house for fair market value, let it appreciate for about a year, sell it, and pocket a $100,000 profit.  Simple, right?

But what happens when the cheese moves?  For the first time since 2012 (this article is written August 2022), we’re seeing a chink in the armor.  As the Federal Reserve continues raising interest rates trying to bring inflation under control, mortgage interest rates have more than doubled, which is causing real estate values to level off, and in some areas around the country, dare I say it, home values are…falling!

When appreciation ends, when home values head south, when mortgage rates climb, when lender’s tighten lending standards, when days-on-market turn into months-on-market, those who are fluent in the language of creative deal structuring don’t run for cover screaming, “The sky is falling!”  Instead, because of a lack of competition, they see opportunities everywhere!  They do more great deals than ever before!

A couple of questions: Are you fluent in the language of advanced creative deal structuring?  Do you know how to do Structure Stacking deals?

If either of your answers to these two questions is, “No,” then when do YOU think is the best time to start learning how to creatively structure YOUR deals?

Is Structure Stacking a skill worth mastering?  Have you counted the number of leads you’ve thrown in Trashcan City because you (wrongly) believed there was no deal there?  Have you taken time to wonder how much these thrown-away leads have cost you?

Most investors who came on the scene after 2012 are solely focused on wholesaling and/or flipping.  This means they believe to do a deal, they must get the property under contract for seventy cents on the dollar minus all expenses.

If a seller won’t agree to this offer, we call it THE BIG DAMN HAMMER offer, many would-be investors simply throw this valuable lead away.

What if you had the creative tools in YOUR deal structuring toolbox to buy a property, pay more than its fair market value, and still make a great return on your investment?  Interested?

Right now, you may be confused about Advanced Creative Deal Structuring in general and Structure Stacking in particular.  Perhaps the best way to understand these two techniques is to see them in action.

The following are three deals that were creatively structured using Structure Stacking.  These three deals will help you see more clearly how creative deal making works.


Deal #1

A seller was being relocated and needed a quick sale of her home.  The home was in good shape; it just needed interior paint and some carpet.  The seller agreed to a Subject-to Deal.

Most investors think, great, no problem, I’ll get out my Subject-to paperwork and whip this deal together.  Problem was, by itself, strictly as a Subject-to Deal, this deal wouldn’t work because the seller’s property had nearly $200,000 in equity, an amount the investor did not have in the bank.

To construct an acceptable offer for the seller, we did some structure stacking.

First, at closing, using a warranty deed, title transferred from the seller’s name to a title holding trust (land trust).  The buyer was the beneficiary of the trust.

Second, at closing, the seller’s mortgage was left in place.  The buyer agreed to make the seller’s mortgage payments, on the seller’s mortgage, for the seller, until the seller’s mortgage was paid in full according to the terms of the seller’s note.  (aka Subject-to Deal)

Third, the seller received $10,000 cash at closing – the amount the seller requested.

Fourth, the seller also received a secured promissory note in the amount of $170,000, 30 years, 4% interest-only, with monthly payments of $566.67, and a balloon payment of $170,000 due in 180 months.

With this structure, as a rental, after all expenses, this property cash flows $275 per month.

Without Structure Stacking, solely as a Subject-to Deal, do you see that this deal never would have closed?

In addition to doing a Subject-to Deal, the other creative tools used to make this deal work were a land trust, owner-carry note, and a mortgage to secure the owner-carry note to the property.

Do you see that four creative tools were used to make this single acquisition possible, and that without using these four tools, this transaction never would have occurred?


Deal #2

In 2012, during the Great Recession, a landlord wanted $85,000 for his rental property.  Problem was the property’s fair market value was only $70,000…21% below the seller’s asking price.  (Remember, this was during the Great Recession and real estate values had tanked!)

We agreed to his way-to-high asking price provided he agreed to our purchase terms (how we’d pay for the property).

Here’s our accord: Kim and I paid the seller his full, way-above-market asking price of $85,000.  At closing, we gave the seller $2,000 cash and a Purchase Money Note for $83,000 with 360 monthly payments of $417 at 4.43% interest.  This was an Owner Financed Deal.

We loved the house and the neighborhood.  We believed the rental house would be a very profitable long-term hold.  We knew the property would cash flow and our tenants would cover all the investment home’s expenses.

Fast forward to today (2022).  As this is written, we just completed a huge ($145,000) rehab to this property.  We’ve changed this property from a four-bedroom, two-bath home with a closed floor plan, to a four-bedroom, three-bath home with an open floor plan.  In addition, to dramatically increase cash flow, we’re altering this property’s use from a long-term rental to a mid-term rental.

Today, the mortgage balance to the seller stands a little above $65,000.  The property’s current fair market value is around $300,000.  Best of all, as a rental, this property will now bring in $6,000 per month!

Here are the creative tools we used to make this deal successful: Purchase Money Note, Pro-borrower Security Deed, Trust Agreement, Estopple Letter from seller’s tenants, Lease Agreement, Second Bite of the Apple Deal, Private Money Lender who agreed to use a different property for note collateral.

Without creative deal structuring, without having these tools in our deal structuring toolbox, no way would this high yielding and monstrously cash-flowing deal have been possible.


Deal #3

A few years ago, I took a group of 60 real estate investors door knocking.  We were not in Georgia.

At one of the houses, the owner pointed to the house across the street and said, “My neighbors are about to put their house on the market.  He’s retiring soon and wants to move to Florida.”

We call these Shadow Sellers.  A Shadow Seller is someone who will put their home on the market within the next 12 months, but it’s not on the market yet.  Neighbors often point to the Shadow Sellers in their neighborhood.

As a group, we quickly marched across the street and knocked on the Shadow Seller’s door.  The owner confirmed what his neighbor had said.

He told us his house was worth about $165,000, and he wouldn’t take a dime less than $165,000.

His was a nice three-bedroom, two-bath, two-car garage, stepless ranch.  It was in great condition; it only need a $3,000 interior paint job.

After inviting all 60 of us in, he let us know that he wanted a quick sale, would rather not go through the hassle and cost of using realtors, and said it would be five months before he would be ready to move to Florida.  We also learned his home was free and clear, and market rents in the neighborhood were $1,350 per month.

Remember, I found this deal by knocking on the homeowner’s door.  I’m about to make a creative purchase offer the owner is likely to accept.  The problem is, I do NOT want to own this home.  It’s NOT in my five-mile investing circle…heck, it’s not even in my state!

Given this information, and putting yourself in my shoes, how would YOU structure this deal?  Before reading further, take a few minutes and put an offer together.

The Shadow Seller and the T-bar told us what he wanted: He wanted a fast closing, he needed five months to move out, and he wanted to sell his home for $165,000.

Below is my offer, which the seller accepted.  Why did the seller accept my offer?  Because he got everything he wanted.

I agreed to pay $165,000 for his house.  I would pay $5,000 down and give him a secured promissory note for $160,000 and make 360 monthly payments of $610 at 2.23% interest.  In addition, we’d rent him his home back for five months for $810 per month, and he agreed to cover any repairs that need to be made during his five-month rental period.

Now comes the big question?  Who’s going to own and manage this rental?  Not me, that’s for sure!  The property is states away from where Kim and I live.

How would YOU solve this problem?  Give this some thought before reading further.

One of the investors who was door knocking with me that day was an experienced landlord.  He and his wife owned 8 single-family rentals in this town.  I asked, “What is it you seek, cash flow (net rental profit), upside (appreciation and amortization) , or some of both?”  He replied, “Heck, we’re estate builders, we need more monthly income, we prefer the cash flow.”

I agreed to assign the contract to this experienced investor.  This means that after closing, he would own the house; he’d get the tax benefits of owning a rental; he’d keep all the cash flow this nice home produces.

In exchange, at closing, the investor gives me a Pure Option that will be secured to the property using a mortgage.  It gives me the right to buy this property from him at any time within the next 35 years for THE THEN BALANCE OF THE MORTGAGE.

When I say, “FOR THE THEN BALANCE OF THE MORTGAGE,” this means that my purchase price will be whatever the investor owes the seller at the time I exercise my option.  In other words, with every mortgage payment the investor makes to the seller, my purchase price drops.

Ready to get your mind bent?  What will my purchase price for this property be when the owner-carry mortgage is paid off thirty years from now?  Neat creative structure, huh?!

Here are the creative tools used to make this one deal possible:

  • Purchase and Sale Agreement
  • Contract Assignment Agreement
  • Title Holding Trust
  • Owner-carry Promissory Note
  • Owner-carry Mortgage to secure note
  • Lease Agreement between investor and seller (5 months)
  • Lease Agreement between investor and tenant/occupant (12 months – once seller moves to Florida)
  • Pure Option Agreement
  • Mortgage to secure Pure Option Agreement

Without using these 9 creative deal structuring tools, there’s no way this deal would have been successful.



Understanding the language of creative deal making allowed these three deals to be successfully completed.  But what if we didn’t fluently speak this language? There’s no way any of these three deals would have been possible, costing us hundreds of thousands of dollars in lost appreciation and cash flow.

Join us at BillandKimCook.com to learn the language of advanced creative deal structuring and structure stacking.  Our site is geared for experienced real estate investors.

Do you seek advanced real-world real estate investing information?  Go to BillandKimCook.com.  It’s packed with free creative deal structuring techniques and strategies.  You’ll also find in-depth interviews with some of the most successful real estate investors in the country.  If you have questions, give Bill a call at 770-815-8727.

Bill Cook Editor
Bill and Kim Cook are a husband and wife real estate investing team. Their core belief is that real estate investing is not about buying, selling or renting property. It’s about helping folks solve their real estate problems.