It was of great sorrow when learned of the passing away of one of our clients. We had helped him finance multiple apartment buildings over the years, but most recently we had helped him on this particular property. When he had purchased he was in a 1031 exchange and the subject property was not stabilized and as a result we placed him into a short term bridge loan, then a few months later once the property was stabilized we were able to place him into agency type financing. Unfortunately, soon after closing we then learned that he passed away before his first payment became due. This is when all havoc broke out. It turned out that his property management company had been trying to get him to respond to certain tenant related issues, but he didn't and once he passed away the situation worsened and then ultimately the property was transferred to a successor trustee. They then hired a new management team and in a nut shell they took over a property that had tenants that weren't paying and multiple tenants that just vacated, and the property was not being cared for. The successor trustee wanted nothing to do with the property and just wanted it sold so they listed it for sale and with the plans to negotiate a short sale with the lender. One of our other past clients entered into contract to buy this property and we received notice to assist him with financing. However, during his due diligence he realized that this was just too big of a project for him, but his realtors had another buyer who stepped in and the PSA was assigned to them. Once again, we received the task to finance the purchase for these new buyers. The property just kept coming back to us!
The biggest challenge to financing this property was the multiple vacancies, the non-paying tenants, and the poor condition to the property. It only allowed for bridge type financing. The other major challenge was the seller had to get the lender to agree to a short sale on the property.
We arranged a bridge loan, and coincidentally it was with the same lender we had arranged a bridge loan with when it was bought by our client who had passed away. We were able to assist the seller and their agents with communicating to the current lender and we turned out to be instrumental in the negotiations for the short sale. During this we created a new client relationship with the buyers for the property and we also have already started working on loans with the agents that had listed this property for sale. The deal closed and we have a feeling this transaction will be coming back to us when the buyers are ready to do their take-out loan.