130% of the appraised value — not the down payment
It's not one loan at 130% LTV, and it's not a multiple of the down. It's the total financing stacked on the property — the senior loan plus the seller's carryback — measured against the appraised value.
Two layers of financing sit on the house. The senior DSCR / debt-fund loan is the conventional piece at roughly 70% of appraised value. On top of that, the seller's carried balance (their capital contribution) is a second layer of financing — money the buyer didn't have to bring. Add them and the total financing runs to about 130% of value. Because the senior loan alone is bigger than the cash actually needed at closing, the buyer brings ~nothing of their own and walks away with cash.
The capital stack on a $200,000 house
Senior loan + seller carryback = ~130% of value. The bar runs past the value line — that's the whole point.
$200k deal (Clip F)
- Senior loan 70% = $140k
- Seller carryback = $120k
- Total = $260k = 130% of value
- Of the $140k loan: $80k seller · $20k fee · ~$40k to buyer
$225k deal (Clip E)
- Senior loan ~70% ≈ $150–157k
- Seller carryback = $145k
- Total ≈ $300k ≈ ~130% of value
- Of the loan: ~$80k seller · ~$25–30k fee · ~$40k to buyer
Can the buyer tap that capital contribution for other projects?
This is the key misunderstanding to avoid. The seller's capital contribution is not a pile of cash sitting in the LLC's bank account. It's an accounting position — the seller's equity claim representing the balance the buyer still owes. There is nothing there to "withdraw."
Remember how the escrow leg works (Clip E): the transactional funder's money flows into escrow and right back out the same day — "they get their money back right after they submit it to escrow and we close with our fund." No lump of liquid cash is left parked inside the entity for the buyer to spend.
Where the buyer's real liquidity comes from
- Cash-out at closing (~$40k): because the senior loan exceeds the cash the deal needs, the buyer pockets the difference at close. That is the spendable money — the "credit card you pay yourself now," redeployable into other projects.
- The refinance at the balloon: later, refinancing can pull out equity (and is how the seller is paid). That's new borrowing against the asset, constrained by the senior lender and the seller's position.
- Cash flow: the property's monthly net income, once obligations are covered.
What the buyer can NOT do
- Withdraw the seller's contributed capital as free cash. It isn't a fund balance; it's the seller's equity/claim. Pulling it out would be taking the seller's money.
- Treat the trust variant as a piggy bank. When the balance "goes into the trust account governed by the trust" (Clip C), a trustee governs it — the buyer can't freely draw on it for unrelated projects; that's the point of using a trustee.
If a buyer could freely tap it, that's a red flag
The seller's capital contribution / trust corpus is supposed to be locked to this deal as their protected position. If the structure actually let the buyer sweep that money into other projects, the seller's "equity" would be hollow — exactly the kind of thing the Risk module warns about. Liquidity for other projects should come from the buyer's own cash-out, not the seller's carried capital.