Windows 7 Calculator Tip

I've just upgraded to Windows 7 and am still exploring all the new features, but one thing I noticed that could be of use to real estate investors is a new function in Calculator. Now Calculator can easily figure out any one of the following items given values for the others: Monthly Payment, Purchase Price, Down Payment, Term (Loan Length), and Interest Rate. No more messing around with spreadsheet formulas! Below is a picture of how to access this. (Click for larger size.)

Another Hard Money Loan Starting And One Wrapping Up

Got some emails yesterday for two new hard money opportunities from my partner in California. I only have the funds available for one right now, unfortunately.

The deal I chose is a first mortgage on a property in Castro Valley, CA. The property is a 1,500 square foot duet, built in 1979. (A duet is similar to a duplex in that it is two units that share a common wall. However, unlike a duplex, the units can be owned by different parties.) The property was bought at a foreclosure auction by two professional rehabbers. They already have a mortgage on another property with my partner and they are paying on time on that one.

The rehabbers bought the property for $254,000. My partner estimates it will take about $20,000 to fix up. Comps are conservatively valued in the $320,000 and up range. There is one comp that is currently on the market listed at $339,000, although it has been on the market for 2 months, so that might be a tad high. Another comp is in the sale pending status with a price of $299,000. Our property is in a better location, however. The defaulted mortgage was in the amount of $325,900, but the lender started the auction bidding at $198,900. The price was bid up to $254,000, which is the price the borrowers got it for. We are writing a mortgage for $192,600, which is a 75.8% LTV, using the conservative comp figure. Terms are the usual - 10% net to me, the investor (borrower is paying 12%, but my partner keeps 2% as a service fee), interest only payments due monthly, loan term is 1 year. There is an incentive for the borrower to pay off the loan early.

The rehabbers purchased this property on 11/16 and on 11/17, my partner visited the property. There were already workers in there rehabbing the place, so they are not wasting any time on this.

I'll refer to this investment as Hard Money #10.

In other news, hard money loan #9 may be wrapping up soon. The property is in escrow now. We estimated the property to be conservatively worth $330,000 to $350,000. It was listed at $389,000 and it quickly got an offer for $410,000. Nice! The borrower bought it for $238,000 and put about $58,000 in improvements. He'll make a bit over $100,000 on this one in 3 or 4 months time. Nice! (of course, this assumes escrow closes..)

Existing House Sales Prices for Q3 2009

The National Association of Realtors has released their list of Median Sales Prices of Existing Single Family Homes for Metropolitan Areas. (Couldn't they have come up with a better title?) Here is a link to the list (warning: it's a PDF file). Prices in some areas are still declining, while other areas are beginning to see a rebound. This list could be used two ways - if you are a bottom feeder and looking to buy in places that might be bottoming out, look for the cities that had the largest decline - Cape Coral, FL (-40%), Las Vegas, NV (-34.5%), or my area, Phoenix (-22.9%). Of course, the danger in this is that prices may not have bottomed out and may keep dropping.

Or, if you want to invest in places that may have already bottomed out and might now be on the rebound, look in areas that had the biggest increase - Cumberland, MD (+19.2%), Davenport, IA (+14.3%), or Oklahoma City, OK (+9.1%).

The NAR tried to put a positive spin on this report, saying "To be sure the numbers are mixed and some areas are experiencing reversals, but over all we are beginning to pull ourselves up out of this slump..." That seems like wishful thinking on their part as the vast majority of areas on this list have experienced pricing declines; only 28 of the 155 areas listed have positive changes.