Interesting scenario...

[N/A N/A]

I am working with a developer in purchasing builder close out units. The development is 180 units with 10 remaining. All 170 units were sold at market, I am receiving a 40% for taking down all ten.

Here is where it gets interesting. I obtained financing for the 4 units I am buying personally, however, my other two buyers are having trouble. The developer has offered to get creative in helping them take these units down with seller financing or any other creative solutions I can come up with.

The way we structured the deals initially was to contract at 80% of their market value and take out a 90% non-owner occupied mortgage. With our down stroke that would leave us with a 72% LTV property and 12% going back to our third party management company for reinvestment.

What I proposed was to have the developer quit claim us onto title and we could then do a 70-75% cash out refi. The developer has agreed and we have a lender who will allow no title seasoning on a cash out due to the LTV and our strength as buyers.

My question is: how do we get the developer their payoff? They own the property free and clear, if we cashed out our proceeds and the "payoff" or what boils down to the purchase price, the lenders won't do it. As I'm typing this I think the best strategy is to have them seller finance and we can cash out refi from the seller financing, if the lender will cash out refi from a quit claim, I would think they would allow the same terms under this scenario.

I'm thinking out loud here (or writing out loud, or something), thoughts, ideas, comments?