I’ve never structured a Stack/Morby finance deal before, and this client came to me because she’s fairly new to the strategy as well. I’m trying to determine whether this is something our DSCR lending partners would even entertain or if it needs to go a different route. Scenario: - Arkansas mixed-use property (2 bed / 1 bath home that’s move in ready that is sitting on 10 acres with a turnkey dog boarding/grooming facility). Sellers are going through divorce and have to sale off assets. - Appraised value: approximately $350,000 (appraised within last 6months, but would need to verify that with sellers) - Purchase price: $210,000 - Seller receives $140,000 at closing to satisfy the existing mortgage - Seller credits $10,000 toward buyer’s closing costs - Seller carries the remaining $60,000 in second lien position - Buyer attempted to purchase property using Morby Method in May, but deal did not follow through due to previous private money lender backing out due to lack of capital. - Prospective residential tenant already ready to sign a $1,000/month lease at closing if Buyer obtains the property. - Kennel previously leased for $2,000/month but the lease ended recently due to the seller’s divorce and needing to sale the property - Buyer is a real estate investor who typically flips, but has 40 years of experience in dog grooming, boarding, and training and plans to stabilize the property before refinancing into long-term financing. My main question is whether any of your DSCR lenders will finance a mixed-use property structured like this with a seller carryback in second position, or if this is better suited for a commercial bridge or another creative financing product. Any guidance from those who’ve closed similar deals would be greatly appreciated. Reason for the question is I know sometimes mixed-use properties can throw up red flags to some lenders. Thanks!

I'm interested who in this group can manage EMD completely independently and might want referrals on deals that offer high payouts at close but need lower upfront fees that we charge. We might be able to refer some periodically. I'll check on this kind of these at times to make sure I understand our group skills. :) @Khalil Yusuf @Mandy Cartagena @Kathleen Miller @Jamey Marcos @Brenda Villafranco

Has anyone closed EMD deals with Fidelity title company in Texas? If so, how was your experience?

@Jeryt Henson made a great comment about doing some of his own EMD lending for $300. It created a long response that I moved here because I realized I was sharing a lot about our philosophy and even how it impacts all of you as acquisition team members. Please share your comments below 👇 🎯 POST Jeryt Henson I have been doing $300 or 10% for the upfront, but with no minimum. Issue here is that I am my own person and $300 puts food in my mouth. I can see how a minimum fee is crucial if you have employees. I think there is pros and cons for each, but I do see more borrowers complain about upfront cost, so keeping it smaller will increase the volume in my opinion. RESPONSE 👀 That makes perfect sense, and I'd consider it stage two when starting to fund deals yourself. We started at stage one, no upfront fee, and doing the reps to learn how to refine the processes, contracts, etc. 😁 Good times. There are different strategies for each phase of a business, and we are blessed to have been able to move through a few of them over the past couple years. First, it was no-upfront EMD. We did this to prove the model, get live repetitions, and generally learn from doing. This was also a time for super cheap rates on other funding types. The loss of money was considered tuition and seed capital in the business. Next, we raised prices, so for EMD it was having a small upfront fee and targeting breaking even. If we really thought about opportunity costs for our money and our time, this was still a deeply negative phase. I'm confident our money in SPY and QQQ funds and me working a corporate job would have generated more money. That was the phase and the price paid. Different phase, different costs, different learnings and development. As volume increased, more money was being used than we had in our winter coat pockets, so it meant borrowing from others, growing those relationships, and dealing with the legal implications of correctly using money from investors, funds, etc.

(Updated) Quick backstory. EMD funding has two fee structures: - 5% upfront + 20% on the back end - 10% upfront, nothing on the back end We've been splitting the back end (20%) and the 10% upfront profit portion with you already, 50/50. The one piece we haven't shared is the upfront fee on the 5% structure. The reason being, the minimum was only $500, and frankly it wasn't enough to cover our costs. That's changing 💥 We're raising the minimum upfront fee on the 5% structure, and once we do, you'll start getting paid on the upfront fees for the 5% portion, just like everything else. We are only raising the minimum fees on EMD, no other changes. Here's the part where you come in. We want your input on where that minimum lands. Vote below 👇 Before you vote, here's the tradeoff to think about: ☯️ The higher the minimum, the more you make per deal. On a $1,000 minimum you'd see $250. On a $2,000 minimum, that's $500. Twice the payout. More is better, right? Or is it ... ? ☯️ The higher the minimum, the harder it is to find deals/borrowers willing to pay it. A $1,000 upfront fee is an easier ask than $2,000. It just means the EMD deal has to be bigger to make a $2,000 fee pencil for the borrower. So it's a real tradeoff, bigger deals and fewer of them at $2,000, or smaller deals and more of them at $1,000. Either way, this is a new revenue stream for you that didn't exist before 💰🪙💰 👇 Vote your preference and share your logic below and we will use that in our decision making. This will change on Monday. Note: No changes to the 5% or 10% fee percentage levels, this vote is only about where the upfront minimum moves to. The upfront minimum for the 10% fee will remain 2x the minimum for the 5% fee.