Glossary

The vocabulary Ben uses on the calls, in plain English. Type to filter.

Stack Method: The overall play: agree to the seller's full price, finance the down payment through a fund, "stack" the remaining balance into a newly-formed LLC as the seller's capital contribution, then refinance the seller out at a balloon. Trades a higher price for better terms and a tax-efficient exit.
Capital contribution: Instead of the seller holding a loan/note against the property, their unpaid balance is treated as money they "contributed" into the LLC that now owns the property. In return they receive an equity position (often ~5%) rather than a creditor's lien.
Seller financing: The seller effectively lets you pay part of the price over time instead of all at closing. In the Stack Method this is reshaped as a capital contribution into the LLC rather than a traditional promissory note.
Debt fund: The investment entity that finances the down payment. The buyer presents as "a debt fund / investment company leveraging our credibility and experience," using the fund to cover the down rather than personal cash.
Transactional funder: A short-term lender who funds the escrow account for the close — often a one-day loan. Their money flows into escrow, the deal closes, they're paid back almost immediately. It's how the large escrow leg (e.g. $125k) gets covered without tying up your capital.
Debt-financed distribution: When the LLC refinances and pays the seller their position out of the new loan proceeds, the seller is receiving borrowed money (debt), not a sale payment. Debt received is generally not taxed as income — the intended tax efficiency. (Depends on the seller's basis; confirm with a CPA.)
Balloon / balloon refinance: A point a few years out (often 5–7) where the structure is settled — typically by refinancing the property and using the proceeds to fund the seller's payout.
Operating agreement: The LLC's governing document. Here it carries the protections — e.g. a 60-day cure period on any missed obligated payment (taxes, insurance, HOA) — and defines the seller's equity position.
60-day cure period: A default protection: if an obligated payment is missed, there's a 60-day window to fix it before remedies kick in. Built into the operating agreement.
Trust variant: An alternative for sellers who don't want LLC equity: the remaining balance goes into a trust account governed by a trust with a trustee. More familiar to some sellers — but it gives up the tax benefits of the LLC/capital-contribution route.
Security agreement: An attorney-drafted document used alongside the purchase agreement to secure the deal. Ben sends his PSA + security agreement; the seller can copy the terms onto their state contract and use the two in tandem.
Purchase & Sale Agreement (PSA): The contract for the sale. Ben's is attorney-drafted; sellers wanting to use their state's form can paste his terms onto it and pair it with the security agreement.
Step-up rate: A payment/interest schedule that starts low and rises over time — "1%, then 2%, all the way up to" the seller's desired number (e.g. 6%). Keeps early cash flow manageable while still reaching the seller's target.
130% financing strategy: How the deal is set up so the end buyer/assignee can leverage more than the purchase price — pulling cash out at their close (e.g. walking with ~$40k per deal) because the structure leaves room above the acquisition basis.
Assignment / assigning to buyers: Passing the structured deal to an end buyer. Because the property sits cleanly in the LLC, the assignee can finance the whole property — the thing a plain wrap/seller-finance note would have blocked.
Full purchase price (the trade): The buyer meets the seller's full asking price specifically to earn better terms — "more aggressive than bank terms" — in exchange for a larger portion of equity paid up front.
Down payment vs. monthly: The two levers sellers care about. Most sellers want a big down payment and don't care about monthly; monthly payments "really kill us" on single-family because the buyer is also carrying its own debt obligations on the financed down.
Appraisal contingency: The full-price agreement assumes the property appraises for that number ("assuming we could appraise for that"). If it won't appraise, the math changes.
Escrow account: Where the large balance sits during the structured close (e.g. the $125k), funded by the transactional funder, before the contribution/trust mechanics take over.
NOI (net operating income): Income after operating expenses — distinct from gross. On the calls Ben checks "gross is different than NOI, right?" before judging whether terms cash flow.
Cash-on-cash return (CoC): Annual cash flow divided by cash actually invested. Drives whether a structured deal is worth doing for the buyer.
LOI blast: Sending letters of intent at scale to find sellers/agents open to terms. Mentioned as part of sourcing the deals that fit this structure.
Lien position / priority: Where a claim sits in line to get paid if the property is sold or foreclosed. A first lien is paid before a second, and all debt is paid before equity. In a seller-carry the seller is usually first; in the Stack Method the DSCR lender is first and the seller is pushed down to equity.
Subordination: Being lower in priority than another claim. The seller's carried balance is subordinated to the senior DSCR loan, so the lender is paid in full before the seller recovers anything.
Capital stack: The layers of financing on a property, from senior debt (top, paid first) down to equity (bottom, paid last). The Stack Method's total stack (senior loan + seller carryback) can reach ~130% of value.
Senior vs. junior: Senior claims get paid first; junior claims only get what's left. Foreclosure by a senior lender extinguishes junior claims — which is why the seller's junior equity can be wiped out.
DSCR loan: Debt-Service-Coverage-Ratio loan — an investment-property loan underwritten on the property's income rather than the borrower's W-2. Needs a turnkey property (not a fix-and-flip) and typically lends ~70% LTV. In the Stack Method it's the senior loan that makes the lender "the bank."
130% / 140% financing: The total financing stacked on the property (senior loan + seller carryback) as a percentage of appraised value — not 130% of the down payment, and not a single 130% loan. Above-100% leverage is possible only because the seller carries part of the price.
Equity cushion: The gap between the property's value and the senior loan. A bigger cushion (lower LTV) protects the seller's junior position in a default; a thin cushion can wipe it out.
Locking up a property: Tying up a seller's property under a purchase contract. If you sign intending to assign and can't perform, you've taken it off the market and cost the seller time — a real harm even if no money changes hands.