Case Studies

╼  Case Studies

Growing Business Faster with BRRRR

A repeat private investor client wanted to purchase a small 2 bedroom / 1 bathroom single family home in need of extensive renovation. The rehabilitation budget was roughly equal to the home purchase price. The investor had the capital to purchase the home in cash and self-finance the renovation, 

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but it would have exhausted his liquidity and limited the growth of his business.
M.R. Qualified lent 70% of the initial purchase price and funded construction reimbursements for 50% of
improvements to the property.
The property was fully renovated in 6 months, and the investor was able to make several other real estate investments during this time, using low cost, long-term bank financing. Ten months after closing, the investor repaid M.R. Qualified, and he was able to take cash out of the property by renting it to a long-term tenant and completing a money-out refinancing with a traditional bank loan.

╼  Case Studies

Young Investor Fix & Flip

A recent college graduate with a keen interest in real estate wanted to flip a duplex. The aspiring investor had successfully completed several wholesale deals, but this would be his first acquisition. He was able to produce comparable property sales demonstrating that the subject property was below market on both a purchase and after renovation value basis.

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The client’s means were limited but academic and extra-curricular credentials were strong.
He had a good credit score and clean background check. The client was also willing to put up virtually all of his net worth to fund the project, and contribute sweat equity by contributing labor by himself and a close family member experienced in construction trades.
M.R. Qualified funded over 90% LTV on the purchase price, and provided construction reimbursements on materials costs. The client kept M.R. Qualified informed throughout the renovation process, and several budget revisions were approved without fees or added expense. The property was fully renovated in four months and successfully marketed for sale on the MLS. The client made over $100,000 (4x his initial investment) after paying all carrying costs, renovation expenses and loan fees and expenses.

╼  Case Studies

Fast Fix & Flip

A new private investor client heard about an off-market sale through a wholesaler. The sale had to be completed within ten days to allow the seller to avoid impending bank fees.
The client contacted a reputable real estate agent in the target market and was able to complete a comparable market analysis showing that the after-fee wholesale price was well-below market, and only very light cosmetic renovations were needed.

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M.R. Qualified worked with the investor’s title company to quickly review and sign off on a title commitment.
Loan documents were drafted and M.R. Qualified closed within nine days of initial contact, lending 80% of the purchase price. Cosmetic renovations were completed in a single weekend, and the property was listed for sale on the MLS in less than one week. The property sold in 53 days, and the investor client made over 150% total return on his investment.

╼  Case Studies

BRRRR via Rent Adjustment

A private investor with deep ties in central Maine’s commercial real estate community wanted to purchase a portfolio of properties in Auburn, Maine with below market rents. Most leases were in month-to-month / tenant-at-will status, and the investor planned to make modest building improvements. To facilitate the purchase transaction, the investor sought and obtained short-term bridge financing from M.R. Qualified.

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He subsequently made building improvements, raised rents to market rates, and successfully obtained an upsized commercial bank loan that allowed him to dividend cash out of the portfolio just four months following purchase.
╼  Case Studies

Second Lien PIK Note

A repeat investor client completed a successful BRRRR-to-AirBnB conversion. On refinancing, the appraisal came in high, and initial AirBnB bookings were extremely strong; however, the bank lender was unwilling to lend more than the investor’s basis (cost plus improvements) in the first 12 months of ownership. The investor needed liquidity for other projects underway.

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M.R. Qualified lent the investor a second lien note structured as payment-in-kind (“PIK”) (i.e., interest payments are added to the principal balance each month) between the maximum amount the bank would lend and 80% of the appraised property value. The investor used this additional liquidity in other investment projects. Even though the loan added debt to the property and obligations of the Borrower, the first lien bank lender was supportive of the structure because M.R. Qualified is well-capitalized and the PIK feature kept cash with the borrower.
╼  Case Studies

36-Hour Turnaround

M.R. Qualified received an after-hours phone call from a well-known commercial real estate broker on a Tuesday evening. One of the broker’s purchase transactions was at risk of falling through because the incumbent lender was not able to perform on schedule. The borrower was well capitalized and putting over 40% down, but the remaining 60% needed to be financed and closed by Thursday morning. Title work on the subject property was complete.
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M.R. Qualified immediately started underwriting the borrower and the deal. Working together, the borrower and real estate agent provided necessary information Wednesday morning. M.R. Qualified engaged counsel, and by Wednesday evening, underwriting and loan documents were complete. M.R. Qualified wired $1.4MM loan amount to the escrow agent for closing Thursday morning.