January Apartment Update and HML #30

First off, my hard money loan #30 was paid off a couple weeks ago. This only lasted a couple of months.

On the apartment front, occupancy was at 96% for January and the total revenue hit almost $204,000 - the highest ever. Cash flow was a positive $18,000 for the month. As mentioned last month, there was a fire at the property around Christmas time. The insurance adjuster and an engineer have been out to examine the property but we have not yet received their report. The year is starting off well and with just one month under our belt, our income is already almost $17,000 over budget.

Which brings me to the next point - the possible sale of the property. It's looking good so far. The buyers have completed their inspections and the bankers are now working on going through the process of getting the buyers approved to assume our loan. Once that is done, the sale can progress. At least point, we are estimating a close of escrow around the middle to end of April.

HML #30 Started

Things have picked up lately. After a period of low activity, it seems our borrowers are now once again buying properties. My partner has five loan requests to evaluate. Here are the details of the one I invested in.

This is a vacant single family home in Vallejo, California - in the San Francisco Bay area. It's a 1,310 3 bed, 2 bath home with an attached 2 car garage. It was built in 1994 and it sits on a lot just over 6,000 square feet. The front exterior of the property looks nice, although the back needs some work. Some landscaping needs to be done and, in fact, there were landscapers there working when my partner went to look at the property.

The borrower is our biggest borrower and he purchased the property for $141,000 at a foreclosure auction.The opening bid was $132,000, so others wanted this one as well. Zillow.com estimates the property to be worth $180,000. Based on MLS sales of comps, my partner estimates it to be worth $225,000 as-is and $265,000 after repairs. There are five good comps in the MLS. Four of them were short sales. Three of the five sold for more than the listing price. One of the comps is from May and the rest of 3 months old or less. All sold for higher than their Zillow.com "Zestimate." (Really, the only usefulness of their estimate, IMHO, is to get a ballpark figure of value. I'd never use it as a basis for REI analysis.)

My partner gives the neighborhood a not so good rating, but that normal for this borrower. He specializes in those areas. In terms of the loan, we are lending $105,000, giving us a 74.5% loan to value ratio using the auction buy price. Using our as-is estimate of $225,000, it's a LTV of 46.7%. The biggest drawback to this loan is that it is in an area we don't normally lend in and that our borrower doesn't usually buy in, meaning we could be off on our value estimates.

Here are some pictures.