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!
Tuesday, August 22, 2006
First Payment From Commercial Project Received
Posted by Shaun at 9:27 AM
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3 comments:
That's great. Great to hearing it's going well. I have to give Les a call to see what's up.
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?
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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