Reviving Two Dead Real Estate Equities

Turning Two Dead Real Estate Equities into Cash

The Background

Ralph and Patti Simons were both in their mid-60’s, recently retired, and in good health, but they had a financial problem needing a solution. They wanted to use their past business experience to build their net worth and their income.

Ralph was an experienced carpenter and Patti was an experience office manager and bookkeeper. Their goal was to buy a run-down house, fix it up, sell it; and then they would repeat the process and gradually build wealth and income. They had the idea, but lacked the know-how to do it.

They had enough retirement income from Social Security and pensions to just get by financially, but not enough cash to acquire a fix-and-flip property and upgrade it. They had the following assets: the equity in their house, good credit, a work ethic, a good idea, carpentry and booking skills, and $25,000 cash.

The property they felt comfortable buying and rehabbing would be a rundown, neglected house in a decent neighborhood that would cost about $185,000.

Getting Financing

They found the property they wanted and came to me for help and coaching to implement their idea. I arrange the financing to purchase the property and do the fix-up using the parties own equities. Bank financing was not used.

The property on Birch Street was owned by the Thompson family; they had inherited it from the former owner who recently died. They lived in another state; they could not sell the house because of its run-down, neglected condition. They did not want to own the property; they did not want to rehab the property; they wanted to cash out and divide the cash proceeds.

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After getting acquainted with the facts and the parties, I suggested the following financing plan to the Simons. They doubted it would work but agreed to do it–probably because they had no other options.

The Financing Plan

1. Simons will buy the Birch Street property for $185,000.

2. Simon will pay the Thompsons $75,000 by giving them their 6.0% interest rate promissory note secured by a 2nd mortgage on Simons’ own personal residence.

3. Thompsons will deed the Birch Street property to Simons.

4. Simons will then give Thompsons their $110,000, 6.0% promissory note secured by a mortgage on the Birch Street house.

5. No interest or principal payment was to be made on either promissory note while the Birch Street property is being rehabbed; the interest on both notes would accrue until the Birch Street property is fixed-up and sold.

6. Simons will invest their $25,000 cash, plus their own skills and labor in the fix-up project.

The Outcome

After four months of rehab work and two months of marketing the Birch Street property sold for $250,000. At the sale closing, using the proceeds from the sale, Simons repaid in full the two promissory notes to Thomas for $185,000 principal plus accrued interest. Simons paid the real estate commission and closing costs. Simons earned about a $40,000 profit on the transaction. By using my financing plan and coaching along with the two well structured promissory notes and $25,000 cash, Simons earned a $40,000 profit. And, the Thompsons cashed-out of an unwanted, unoccupied house.


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Combining experienced promissory note couching with motivated buyers and sellers resulted in a win-win outcome for all parties. Simons converted a dormant equity into a profitable cash transaction. Thompsons converted a dormant, vacant inherited property into a successful cash-out transaction.