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Tuesday, August 22, 2006

First Payment From Commercial Project Received

I received my first payment yesterday from the large commercial project in Louisiana I invested in recently. Also had an update on the progress from the property owners. They have hired a new property management company and that company is actually moving into the building, which is a plus. This company managed the building for over a decade before the previous owner took over and had the property at 80% occupancy. They are currently at 40%, but they feel they can get it up to 80%. On the bad news front, three air conditioning units went out and they will cost the owner $30,000 to repair.


In looking at my last post on this topic, I realized I forgot to mention one important fact: My ROI on this investment is infinite! Yes, I am getting a 12% return, but the money I put into this project came from a line of credit that is costing me 7%. I get each payment, use some to make my line of credit payment, and pocket the rest. While it looks like this means I am actually making 5% on my money, I am not. Because none of the money generating the income is my money, I have zero dollars in the deal. This means I am getting money each month with none of my money invested, which gives a return on investment figure of infinity! Of course, there is some risk involved in this and I do have reserves set aside in case things go south, but it's hard to beat an infinite return!

3 comments:

Ken (formerly monarchcrest) said...

That's great. Great to hearing it's going well. I have to give Les a call to see what's up.

Trisha#1 said...

Awesome! I can't wait to see how that goes for you! I might consider doing something similar in the future. But, for now, I think you're my guinea pig. ;-) I thought I might be a lender on Prosper.com. But, I wanted to wait and see how it went for you in the long term. Would you consider your Prosper experience to be a "prosperous" one at this point?

Shaun said...

Well, the next post talks a bit more about Prosper. I don't think I would call it prosperous. I've made 4 loans and one of them is 2 months late, so I'm losing money there. I just don't feel comfortable lending any significant amount of money on Prosper, so the little I do lend results in tiny payments and it's almost not worth the hassle to follow up on them.

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