Automatic Income

I received my first payment from Hard Money Loan #4 last night. What is really nice is that the borrower has set me up as an automatic payment from his checking account. Each month, the bank will automatically send me a check. No need to worry about him forgetting to mail it or getting lost in the mail or any of the other excuses people make when payments are late.

Loose End That Just won't Get Tied

Three weeks ago, I requested the return of my deposit from the management company. On July 19, I was told they were waiting on final bills for utilities to arrive before they sent me a refund. Keep in mind, escrow closed on this property on July 14. We are now one month and a half months passed the sale date. All monthly utility bills should have come in long ago. After a couple of unanswered emails, I called the property managers today to see what the holdup was. I was told they received the final bill on Friday and would pay it and get my refund mailed out tomorrow. I also asked for a copy of all invoices. It will be interesting to compare the billing dates on the statements with the dates the property managers told me they received the bills.

Hard Money #5 Deal Is Dead

It seems I spoke too soon about my latest hard money deal. The deal never happened. Les, the guy putting it together, was only willing to lend up to 70% LTV and the borrower wanted 80%. The property would still cashflow at 80% and it was still a good deal, but Les wanted the extra 10% cushion as security for his investors. The borrower didn't want to do that, so the deal has been canceled. On to the next one!

Winning In Real Estate In 2008

Multi #1 Monthly Update

The second monthly update for the Houston apartment complex has arrived and I'm pleased with the way things are going. As they thought last month, they were able to get the occupancy up another percentage point to 94%. And this is even with the rent increases they have implemented, which they say are being received favorably by renters. They still believe they can get it up to 95% or 96% over the coming months. I guess the improvements that are being made are appreciated by the tenants. Those improvements so far include resurfacing and striping of the entry parking lot and new signs with the new property name (both of which were completed last month), and a new water feature at the front entry, which should be complete at the end of this month.

On the financial front, the improvements completed so far have come in under budget. Additionally, we successfully appealed a property tax assessment, resulting in a savings of just over $40,000 compared to the budgeted amount for taxes.

One thing that I would like a bit more explanation on is the management's decision to not move forward with the plan to install a playground area. They have decided there are not enough children in the complex to justify it and management is looking at other amenities to add instead of a playground. But I seem to recall reading or hearing during the due diligence phase of this investment that tenants with children tend to be more stable renters and move less. So while there are not many kids there now, maybe a playground would attract more families. I would think that those would be the type of renters we want to attract. On the other hand, maybe the current tenants are there precisely because there are few kids in the complex and bringing more in would alienate them. Since it's not my area of expertise, I'll have to trust that management knows what they are doing on this one.

Another Hard Money Investment Made

This weekend, I got another opportunity for a hard money lending opportunity from my partner in some other deals, Les. A contractor has purchased a duplex all cash for $355,000 in Livermore, California, which is a bit south of the San Fransisco Bay area. He's coming to us for a first mortgage of $285,000, giving an 80% loan to value ratio. The property was a bank REO, but it is in fairly good shape. ROI is 10% net to me. Interest only payments and the loan length is 1 year. He's personally guaranteed the loan and we can hit his excellent credit score if he is 30 days or more late with a payment.

The property is a duplex on a 7,000 square foot lot. Units are 1,050 square feet (2 bed / 2 bath) and 945 square feet (2 bed / 1 bath). There are 4 parking spaces. Conservative estimate for monthly rental income is $2,800. Borrower, who has better knowledge of the area, believes it can rent for $3,400. If the borrower does not perform and we have to foreclose, the exit plan is to keep the property and rent it out for its cashflow.

I've decided to invest in this. I'll label it Hard Money #5.

Saturday Was Cashflow Day

I received my first payment from Hard Money Loan #3 on Saturday - a nice check for a little over $400. It's nice to be receiving passive income checks again!

Multi #1 Producing Income

Yesterday, I got my first check from my apartment complex investment. It's actually not from the operations of the complex, so it's not very big and it is no reflection on the investment itself. If you recall, I invested in the property, but then the principles of the project were having difficulty raising all the funds needed for purchase. It took them 2 months, but they finally did it. Well, that two months they had my money and the money of other early investors. What they did was put our funds into a regular interest-earning bank account. Now they are returning the interest earned during those two months to the investors. My check was for a couple hundred dollars.

Next month, though, will be the three month anniversary of our purchase of the property. Since they distribute profits quarterly, we should be getting our first real return on our investment then.

Loose Ends (Updated)

Just trying to wrap up the loose ends on the sale of Rental #1. I canceled the home insurance last week and the refund check for the unused portion of the policy arrived today. The only thing left is the return of my funds from the last property managers. On July 19, they said they were waiting to make sure all the final bills have been paid. I'll give them another week and if I don't get anything from them by then, I'll give them a call.

Update: One more thing left: I am also still waiting for the mortgage company to return the monies in my escrow account.