Jimmy Napier - Fox the Financing

Don Konipol · 2026-11-07T07:23:45-08:00

Jimmy Napier - Fix the FinancingJimmy Napier used to teach a course he called fixing the financing. The gist of it was that anInvestor could profit by buying (or investing in) real estate where either a “bad” loan encumbered theproperty or the owner was unable to obtain a loan at all. Jimmy presented this as an alternative to thetypical “flip n flip” which he called “fixing the real estate”.A entire book could be written on just a few of his techniques, but I’ll just provide a quick summary ofsome of them. If anyone would like greater details on any of these, just respond to this thread with yourquestion. Comments, especially from investors who used one of these techniques, or something similar,are of course most welcome.1 - Use your good credit in exchange for property ownership. For a property encumbered with an ultrahigh interest (hard money) loan, and which the borrower can’t qualify for conventional/institutionallong term, low fixed rate financing, the investor can negotiate a percentage ownership of theproperty in exchange for their ability to refinance the property with a much lower rate loan. I’vechronicled in other threads how my partner and I obtained a 60% ownership in a 26,000 sf retail/service center by replacing a 16% loan with a 4% bank loan.2 - Same scenario as above. Investor previously purchased a property with owner financing at 0 or lowinterest rate with SUBSTITUTION OF COLLATERAL clause. Sell the property the loan is secured by,and MOVE the mortgage (substitute collateral) to the subject property again in exchange forownership interest.3 - For property encumbered with previously owner financing, Negotiate to buy a property at fair value,then oﬀer to buy existing loans at 30 - 60% discount.4 - Same as above, oﬀer note holder some cash pay down to restructure the note at 0 interest overlonger term of 7 - 10 years.5 - Buy property at full price with 0% owner financing and 10 - 15 year term. Resell property for sameprice with wrap loan at 8%

Chris SeveneyBusiness Member

Moderator

Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes

6d

It is pretty awesome. If you understand finance, how many different options, ways, and strategies you can use to structure a deal. The one I have never gotten comfortable with is the financing-for-equity component with a third-party lender, because I just don't trust the other party.

Now, if you have more than 50% ownership and have some stake in the overall management of the property, that's probably a different story.

Curious: what are some of the ways, when you structure it like this, to make sure your investment was protected when you had a partial interest?

7e investments53 Reviews

Website View Page

0 Reply

Don KonipolBusiness Member
OP
Investor · The Woodlands TX / Avon, CT · Member since 2009 · 6k+ posts · 10k+ votes
6d
Chris, as usual you’re absolutely CORRECT; a minority interest in a property controlled by a majority stake holder who can’t even obtain a decent loan is at the very least, somewhat suspect.

So, we used this or a variation of the financing for equity strategy twice. With the 26,000 retail/service center mentioned we actually also invested $200,000 as working capital for tenant buildouts. We received a 60% ownership so that was no problem.

The other deal is a warehouse. We obtained 25% ownership, but here's the situation. The title is placed in a new LLC, of which I am the only managing member and the other owners are members, but not managers. The operating agreement gives them the ability to remove me only for fraud or mental incompetence. So I effectively have control of the property. I had originally suggested a structure whereby title was transferred to the LLC with myself as sole member, and the other owners having an option to buy me out for a mutually agreeable price, but the deal killers (attorneys) couldn't come together on agreeable protection for both parties.

Chris, also note that the loans in these two instances are from banks we have great relationships with; as such we're at their lowest interest available ( the retail/service center loan was taken out in 2021 and was fixed 20 years at 4%) and is not personally guaranteed by us as long as it's at 50% LTV or less AND has a one time assumable clause!

Now the bad news, the main bank we used was bought out and the parent bank won’t even consider a loan under anything like those terms; as a result the other bank has revised their offer to reflect the (lack of ) competition. The offer to us is still attractive enough for us to pursue another similar deal, but the window of opportunity is somewhat narrower.
Private Mortgage Financing Partners, LLC
Website View Page
0 Reply

Noah WrightBusiness Member

USA, Nationwide · Member since 2024 · 488 posts · 153 votes

5d

The credit for equity trade in #1 still works, and the 16% to 4% swap shows how much value can sit inside a bad loan. On the DSCR side of it, the part that trips people up is title timing. Most DSCR lenders want the borrower or entity on title for a while before they'll do a cash-out, so an investor who just bought into the deal can find the refi sized or treated differently than they planned. Then there's the guaranty. The person bringing the credit usually signs a personal guaranty on the new loan, so their percentage is paying for that exposure as well as the lower rate. And since DSCR loans are sized off rent, a property that's on hard money because the rent won't carry a normal payment usually won't be rescued by a DSCR refi alone.

[email protected]737-773-3717

1 Reply

Don KonipolBusiness Member
OP
Investor · The Woodlands TX / Avon, CT · Member since 2009 · 6k+ posts · 10k+ votes
5d
Good points. We’ve relied on the old fashioned (and declining) “relationship” banking. Something anyone with less than $100 million can no longer do without great effort. First you’ve got to identify banks small enough to where you’re deal MAkES AN IMPACT. Then, you need to narrow it down to local banks where they can display their “community involvement”. Then, you need to narrow further where the loan office is not only a bank executive, but also has the ear of the President AND loan committee. It also helps if your business partner is a former mid size bank president with extensive contacts in the banking world.

That being said, as you mentioned there's still room with the "non relationship" loans, such as DSCR. For one, a deal can be strict with an owner for a partial interest based on refinancing 6 month or more AFTER the ownership interests are transferred. Obviously, this involves a "give up" of interest should the refinancing not be accomplished. A warranty deed signed and held in escrow is one way to execute such a transaction. Alternatively, or in addition, the party coming in can agree to pay out of pocket the difference in interest between current and proposed up to the time of refinancing. So there's many ways to make it work, some "cleaner" than others.

The bottom line is this - if you have a property with a say 12% short term loan, and you don’t have the credit or capacity to refi a lower rate, and a renewal is annually and cost 3 points, you’re paying 15% for financing. If I come along and can refi for a 15 or 20 year loan at say 7.5%,, then on a $1 million loan the difference is $75,000 per year. This could be $1 million over the life of the loan. Adding a capital infusion component, which adds rental income at say a 15% cap rate, brings great value to the property.

Like most of the ‘CREATIVE’ deals I’ve done, I’ve pursued the opportunities when they appeared; I didn’t seek them out by marketing campaigns. Now looking back I realize how much higher my wealth would be if I had more diligently pursued this avenue.
Private Mortgage Financing Partners, LLC
Website View Page
0 Reply

Don KonipolBusiness Member

OP

Investor · The Woodlands TX / Avon, CT · Member since 2009 · 6k+ posts · 10k+ votes

3d

Jimmy Napier had been negotiating with the owner/seller of a rental duplex to purchase it with seller financing and nothing down. He approached the seller and offered the 20 lots his cost for the lots was about $50 each) as down payment. Interestingly Interestingly, these lots were valued by the taxing authorities at $1500 a piece. The seller of the duplex looked up the tax value of the lots, and after some back and forth agreed to credit the lots at $1000 each ($20,000) as down payment on the duplex, providing seller financing for the balance at 0 % interest fully amortized over 15 years. He did this because (1) he wasn’t able to deal with the type of tenants attracted to this property and (2) Jimmy was paying him about 10% more than he duplex was worth, with no sales commission to reduce his “take”. So Jimmy bought the duplex, worth maybe $200,000, for $220,000, but actually costing him $1000 for the lots and taking on a $200,000 - interest note with payments all principle at $1,111.11 per month.

A deal like this would be creative and successful enough; but this was only step 1 for Jimmy Napier. Jimmy had worked into the note a “substitution of collateral” clause, and then went looking for a situation where he could multiply his “benefits”.

So, Jimmy comes across a MHP for sale, where the bank holding the loan just called the note; the park has many vacant sites, and most importantly the owner/seller has lousy credit. The seller owes $140,000, and any financing he is able to get to replace the bank financing is going to cost him 18%+ in interest, probably 25% with all fees. Jimmy works out a deal giving him 50% ownership to replace the financing with the 0 interest loan. He sells the duplex for about $208,000, netting him $200k cash IF he finds a property to “substitute” as collateral in order to keep the note active; uses $140,000 to pay off the existing bank financing on the MHP, and substitutes the MHP as collateral for the seller financed 0 % interest duplex note. This leaves Jimmy with about $60,000 in cash (the duplex’s cost him out of pocket the $1000 he paid John Beck for the lots), and half ownership of the MHP.

Jimmy purchases some used mobile homes, puts them on the vacant sites, and sells them with $250 down and owner finances the rest. He does this until the park is at 90% occupancy.

Not only is the park cash flowing, but a new appraisal put the value of the MHP at $550,000.

So, for a $1000 investment in some lots, and a lot of know how, wisdom, moxie and experience, Jimmy now has $60,000 cash, and about $200,000 equity in the MHP.

Private Mortgage Financing Partners, LLC

Website View Page

0 Reply

Jimmy Napier - Fox the Financing

5 Replies