Real estate deal structuring
Canterbury property, Culver City
The seller had relocated out of state for work. The market had shifted while the property sat listed for months. She had no equity and was paying two mortgages, and every month the listing sat there, she bled a little more.
A traditional sale could not fix that. With no equity in the property, selling the traditional way would have meant coming out of pocket just to close.
What I could do was structure it. I took over her existing mortgage subject to at 2.875%, put $55,000 down, and positioned the property as a short-term rental. She stopped paying two mortgages. I got a cash-flowing property with a rate nobody can get today.
The numbers: about $96K in annual rental revenue and about $23,760 in profit, on monthly costs of around $3,600 plus a $450 HOA. Cash-on-cash came out to 31-43%, depending on how the furnishing was financed.
The lesson: the deal was not in the price. It was in the structure. These are my actual figures, not a projection or a promise of future performance.