Thursday, February 07, 2013

2012 Year End Apartment Update

I'm getting a bit behind the times here, but here's the 2012 year end results for the Houston Apartment complex.

December was another good month for the property as things continued to improve. The property had the highest total income amount for the year at just over $186,000. Operating expenses were a bit on the high end, due to some legal bills over the delayed payments we had over the past year. Even with that, they did not reach the highest monthly expense amount of 2012. These two things resulted in the highest monthly net income for the year. Actually, this is really the highest because we had one month where the figure was artificially inflated due to an insurance reimbursement of $30,000. We had a net income of almost $16,000. This was enough to push the property into the black for the whole year to the tune of about $29,000! This is almost $44,000 ahead of the budget that was given to investors during the cash call at the beginning of the year.

Rents are trending upwards at about 2% annually and our rent concession figure rose only marginally from last month. Losses due to bad debt dropped 40% from last month.

With the improvement in the property's finances and assuming we continue to stay on budget for 2013, management believes we can begin to look at selling the property sometime in early 2014. We're looking to sell in the $15 million range (we bought the property at around $12 million). If this can be done, the annualized return on investment to investors would exceed the 9% we were guaranteed.Looking back, it appears management has a fairly good handle on budgeting and any surprises tend to be on the good side. At the start of the year, their budget called for the property to lose money each month through June and finishing the year with a small loss. In reality, the property ended up losing money each month through May and finished the year with a slight gain.

In other news, my four hard money loans continue to pay on time. One property was up for sale, but that fell though and it looks like now the borrower is going to keep this for himself and convert it to a rental. That loan is close to coming due, so it should be paid off soon.

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