I've haven't spent a great deal of time investigating, but from the signs I am seeing and the news I am hearing, I am starting to think it's getting close to time to get back into local real estate investing. Prices in my area seem to be coming back down to "normal" levels and I am seeing good deals again, especially on foreclosed properties. I am also seeing a large number of "bank owned" for sale signs around town. Of course, you can't just look at home prices to determine if the market has bottomed out. You also need to look at demand and the availability of buyers. As I said, I haven't done any detailed analysis yet, but my gut feeling is things could be turning around soon. Of course, I could be wrong...
Hard Money loan #6 was paid off a couple weeks ago and I have used the principle from that to make another hard money loan. Call this one Hard Money Loan #7. It should be a fairly short loan. This property is a 2,700 square foot house built in 2006. List price is $380,000 and it is already in escrow to be sold. The seller (my borrower) bought it for $186,000. Homes in the area typically sell for $257,000 to $320,000. The loan is for $138,000, so we are fairly well protected. ROI is 10% with monthly interest only payments.
On the landline phone elimination front, everything has been switched from the landline and I am ready to cancel it. I am pretty happy with Callwave's internet fax service. The only thing I don't like is that they have an address book on their website, but you can't use it to select a number to fax to! Seems a bit pointless to me. Other than that, I've been happy with both sending and receiving faxes through them.
And my annual trip to Las Vegas was again fruitful. Well, pretty much for everyone I went with but me. Everyone got royal flushes at video poker except your truly. My wife won $1,300 with hers. My sister-in-law won $1,500. And my brother-in-law won $1,000 with his first one. Not 10 minutes later, he got a second royal flush and won another $1,000 at the same machine! Although I didn't get a royal flush, I did get the most four of a kinds than anyone else on the trip. Those paid between $62.50 and $200 each. I was a bit disappointed though. It seems the economic downturn has hit the Wynn a bit. Last year, many of their video poker machines were set at full pay ("9/6"). This year, there wasn't a 9/6 machine to be found at either the Wynn or Encore. They were all 8/5, which has a lower total return to the player. Oh well. It didn't seem to hinder us to much!
Showing posts with label Hard Money #6. Show all posts
Showing posts with label Hard Money #6. Show all posts
Moving Forward
Things are moving forward on several fronts.
The property that I had the mortgage on for Hard Money Loan #6 has been sold. Escrow closed last week. I'll be getting my final interest payment from that this week. I've elected to let my partner hold on to my principle for reinvestment in another loan. He thinks he can find another suitable investment in two to three weeks.
The Houston apartment complex had another good month in April. Occupancy remained at 95%, well above the Houston market average of 88%. Cashflow for the month was just shy of $22,000. There were no significant expenses. No word yet on the increased investor returns that management mentioned would be coming.
I've moved forward with my plan to eliminate my landline phone service at home. As I mentioned last month, I tried using myfax.com and had some problems with them. I continued using them to send the occasional fax and their service has not gotten any better. I can count at least three times where I received confirmation from them that a fax was sent but the recipient never got it. After reviewing the companies that several commenters mentioned, I opted to go with Callwave. I had made a list of the various reasons why I rejected the other companies, but I seem to have misplaced that, so here's what I recall: Callwave was one of the few companies that allowed me to port my existing fax number. This eliminates the need for me to make new business cards. Callwave also does not require me to use any special software to send or receive faxes, as some of the other companies did. I also spoke the Callwave's technical support on the phone and, although it was obvious they were outsourcing their support to India, the people I spoke with were knowledgable and helpful and answered my questions. And finally, Callwave's pricing was competitive. I put in the request to port my existing number late last week and the process should be complete sometime this week.
One thing I forgot to include in my analysis was my satelite television receivers. I have two and each has to be connected to a phone line or I get charged $5 a month per receiver. The connection is so the machines can communicate with Dish TV and tell them if I have ordered any pay per view and, I'm sure, to send other information. Luckily, the machines are also network enabled and if they can connect to the internet, you don't need a phone line hooked up and can avoid the $5 fee. I purchased two wireless bridges to add these machines to my wireless network, so that problem is solved. I also found a legal size scanner at Costco for $60. This is cheaper than the $300 I found earlier and the savings more than pays for the two bridges I had to buy. My alarm system has been switched to using radio instead of a phone line, so as soon as my fax number gets ported over, I'm clear to cancel the landline.
I've got my new computer more or less set up now, so things are returning to normal there. It's surprising how lost I felt when I didn't have a computer. All my appointments were in there. Luckily, my iPhone was synced to it, so I still had all my calendar and contact info, but I was still feeling adrift without the computer.
And in 13 days, I take my annual trip to Las Vegas. Hopefully, it will be as profitable as last time!
The property that I had the mortgage on for Hard Money Loan #6 has been sold. Escrow closed last week. I'll be getting my final interest payment from that this week. I've elected to let my partner hold on to my principle for reinvestment in another loan. He thinks he can find another suitable investment in two to three weeks.
The Houston apartment complex had another good month in April. Occupancy remained at 95%, well above the Houston market average of 88%. Cashflow for the month was just shy of $22,000. There were no significant expenses. No word yet on the increased investor returns that management mentioned would be coming.
I've moved forward with my plan to eliminate my landline phone service at home. As I mentioned last month, I tried using myfax.com and had some problems with them. I continued using them to send the occasional fax and their service has not gotten any better. I can count at least three times where I received confirmation from them that a fax was sent but the recipient never got it. After reviewing the companies that several commenters mentioned, I opted to go with Callwave. I had made a list of the various reasons why I rejected the other companies, but I seem to have misplaced that, so here's what I recall: Callwave was one of the few companies that allowed me to port my existing fax number. This eliminates the need for me to make new business cards. Callwave also does not require me to use any special software to send or receive faxes, as some of the other companies did. I also spoke the Callwave's technical support on the phone and, although it was obvious they were outsourcing their support to India, the people I spoke with were knowledgable and helpful and answered my questions. And finally, Callwave's pricing was competitive. I put in the request to port my existing number late last week and the process should be complete sometime this week.
One thing I forgot to include in my analysis was my satelite television receivers. I have two and each has to be connected to a phone line or I get charged $5 a month per receiver. The connection is so the machines can communicate with Dish TV and tell them if I have ordered any pay per view and, I'm sure, to send other information. Luckily, the machines are also network enabled and if they can connect to the internet, you don't need a phone line hooked up and can avoid the $5 fee. I purchased two wireless bridges to add these machines to my wireless network, so that problem is solved. I also found a legal size scanner at Costco for $60. This is cheaper than the $300 I found earlier and the savings more than pays for the two bridges I had to buy. My alarm system has been switched to using radio instead of a phone line, so as soon as my fax number gets ported over, I'm clear to cancel the landline.
I've got my new computer more or less set up now, so things are returning to normal there. It's surprising how lost I felt when I didn't have a computer. All my appointments were in there. Luckily, my iPhone was synced to it, so I still had all my calendar and contact info, but I was still feeling adrift without the computer.
And in 13 days, I take my annual trip to Las Vegas. Hopefully, it will be as profitable as last time!
If It's Not One Thing, It's Another
After being out of work for almost 5 months, a couple weeks ago, I was able to get a job on a 4 month contract. I've another company that is interested in me for a full time position as well, but that is taking a bit longer to play out. As you might imagine, when I was not working, expenses had to be cut back and plans put off until later. I was living the classic case of "deferred maintenance" that many real estate investors know about from looking for properties to purchase form owners in similar situations - if it is still working, don't put any money into it.
So once I got a job, I went on a buying spree - both my car and my wife's car needed new tires, routine maintenance and other repairs to the tune of about $1,000 each, our dishwasher and oven got repaired, and some other general stuff was done. I was just thinking I was about caught up when... my computer died. Even worse, it died right after I bought something to fix a different problem it had.
Saturday night, I noticed my computer's event log was showing lots of disk drive-related errors. I knew the drive was going to fail soon, so on Sunday, I went out a bought a new drive. When I got home, I put the drive aside and planned to install it that evening. Two hours later, I went to check my email and the machine locked up hard. I cycled power and, in the middle of booting, everything went dead - the screen went black, the drives stopped spinning, and the only light on the machine was a blinking orange LED in the power button. It would not turn on again. After much investigation, I noticed a couple of blown capacitors on the motherboard. Crap. Dead motherboard. Well, at least I hadn't spent any time replacing the hard drive yet.
Thankfully, I have some income coming in now to pay for a new computer, in addition to the other repairs I had to pay for. And, even more thankfully, I had made a full backup of my computer about 10 hours before it failed.
Anyway, so after being unemployed for months, I was just starting to get back into the swing of things and was thinking about putting together another blog post, and now this happens. It'll be about 1-2 weeks before the new computer arrives.
One the positive side, I received another payment from one of the four flipping LLCs in California. I also received a quarterly payment from the Houston apartment investment, which, as I mentioned last month, should be increasing in the future. The same day I received those checks, I also received my huge federal income tax refund. Unfortunately, it was so huge because I had a huge loss on the sale of Rental #1. Well, the tax refund gave me back about one-third of my loss and, really, it came at an opportune time. I would like to post updated ROI numbers for these investments, but, unfortunately, all the data was on my computer.
So once I got a job, I went on a buying spree - both my car and my wife's car needed new tires, routine maintenance and other repairs to the tune of about $1,000 each, our dishwasher and oven got repaired, and some other general stuff was done. I was just thinking I was about caught up when... my computer died. Even worse, it died right after I bought something to fix a different problem it had.
Saturday night, I noticed my computer's event log was showing lots of disk drive-related errors. I knew the drive was going to fail soon, so on Sunday, I went out a bought a new drive. When I got home, I put the drive aside and planned to install it that evening. Two hours later, I went to check my email and the machine locked up hard. I cycled power and, in the middle of booting, everything went dead - the screen went black, the drives stopped spinning, and the only light on the machine was a blinking orange LED in the power button. It would not turn on again. After much investigation, I noticed a couple of blown capacitors on the motherboard. Crap. Dead motherboard. Well, at least I hadn't spent any time replacing the hard drive yet.
Thankfully, I have some income coming in now to pay for a new computer, in addition to the other repairs I had to pay for. And, even more thankfully, I had made a full backup of my computer about 10 hours before it failed.
Anyway, so after being unemployed for months, I was just starting to get back into the swing of things and was thinking about putting together another blog post, and now this happens. It'll be about 1-2 weeks before the new computer arrives.
One the positive side, I received another payment from one of the four flipping LLCs in California. I also received a quarterly payment from the Houston apartment investment, which, as I mentioned last month, should be increasing in the future. The same day I received those checks, I also received my huge federal income tax refund. Unfortunately, it was so huge because I had a huge loss on the sale of Rental #1. Well, the tax refund gave me back about one-third of my loss and, really, it came at an opportune time. I would like to post updated ROI numbers for these investments, but, unfortunately, all the data was on my computer.
March Updates
It's been a good week!
I received another interest payment for the hard money loan I made on the property in California. I also received another on-time payment from my hard money loan to my (former) co-worker. And last, but not least, I got a great monthly update on the Houston apartment complex.
Total revenue for the month of March was $199K, the highest amount so far. Management also collected some bad debt that they had previously written off as uncollectable, so that was bonus money coming in.
Occupancy was 95% for the month of March and cash flow for the month was just over $32,000. The property is performing better than expected. Management will be revising their forward-looking projections based on the improved performance. The investor distributions for the first quarter will be mailed out this week. But the best news of all of is that management will be increasing investor distributions in future months based on the better-than-expected performance of the property!
I received another interest payment for the hard money loan I made on the property in California. I also received another on-time payment from my hard money loan to my (former) co-worker. And last, but not least, I got a great monthly update on the Houston apartment complex.
Total revenue for the month of March was $199K, the highest amount so far. Management also collected some bad debt that they had previously written off as uncollectable, so that was bonus money coming in.
Occupancy was 95% for the month of March and cash flow for the month was just over $32,000. The property is performing better than expected. Management will be revising their forward-looking projections based on the improved performance. The investor distributions for the first quarter will be mailed out this week. But the best news of all of is that management will be increasing investor distributions in future months based on the better-than-expected performance of the property!
Fell Out Of Escrow
The property that is the collateral for hard money loan #6 fell out of escrow and is now back on the market.
Nothing much new to report. I've been working on getting my paperwork together for my taxes. The four flipping LLCs I am invested in in California all reported losses last year. The amount ranged from 1% to 3% of my investment. I'll be taking the losses as deductions on my taxes. On the positive side, the people running those have some other LLCs they recently started that are showing profits now. Perhaps the California real estate market is starting to turn around. Either that or they are able to buy at serious discounts.
I just finished reading The Snowball: Warren Buffett and the Business of Life, a biography of Waren Buffett. I recommend it to anyone interested in business or investing. The first one-third was somewhat hard to get through for me because it dealt mainly with Buffett's ancestors and how they came to America and what they did. The latter part of the book was much more interesting, especially since, having been a Berkshire shareholder since 2000, I was reading about events I had heard about through Buffett's annual letter to shareholders.
I am also about 2 chapters into The World Is Flat 3.0: A Brief History of the Twenty-first Century and I can already tell this is another must-read book for anyone interested in business. My wife is taking classes for her MBA and this was one of her textbooks. I'm glad she convinced me to read it.
Nothing much new to report. I've been working on getting my paperwork together for my taxes. The four flipping LLCs I am invested in in California all reported losses last year. The amount ranged from 1% to 3% of my investment. I'll be taking the losses as deductions on my taxes. On the positive side, the people running those have some other LLCs they recently started that are showing profits now. Perhaps the California real estate market is starting to turn around. Either that or they are able to buy at serious discounts.
I just finished reading The Snowball: Warren Buffett and the Business of Life, a biography of Waren Buffett. I recommend it to anyone interested in business or investing. The first one-third was somewhat hard to get through for me because it dealt mainly with Buffett's ancestors and how they came to America and what they did. The latter part of the book was much more interesting, especially since, having been a Berkshire shareholder since 2000, I was reading about events I had heard about through Buffett's annual letter to shareholders.
I am also about 2 chapters into The World Is Flat 3.0: A Brief History of the Twenty-first Century and I can already tell this is another must-read book for anyone interested in business. My wife is taking classes for her MBA and this was one of her textbooks. I'm glad she convinced me to read it.
Update
Time for another monthly report on the Houston apartment complex! In short, everything seems to be going according to plan. Income and expenses are pretty much on-budget, once the repair expenses from the hurricane are reimbursed from the renovation impound account. Also, the hurricane repairs are now complete, so there will not be any more of those expenses going forward. Management is working on upgrading the office entry and resurfacing the swimming pool deck to enhance the overall look of the property. Cash flow for January was just over $20,000. Occupancy dipped in January to 94%, which apparently is typical after the holidays. At the time the monthly report was written (last week), occupancy was back up to the phenomenal 97% again. In going over the financial reports, I see we made close to $400 in pay phone income. That surprises me. I can't believe pay phones get that much use anymore! To put that figure in perspective, the pay phone income was about $20 more than the income from the laundry machines last month and 50% than the income from the vending machines. I should find out if we are getting any sort of monthly payment from a phone company to have the telephone on the property.
As I wrote about last time, hard money loan #6 should be closing soon. I don't have a specific date for when the sale will close escrow, but I am guessing it will be the end of the month.
And finally, next month, my one remaining loan from prosper.com will be paid off. I'll be glad to be able to get rid of that thing. Three of my for loans defaulted and the final one was only bringing in about $3 a month. Hardly worth the time I had to spend keeping track of it.
On a personal note, last week, I achieved my Microsoft Certified Technology Specialist certification for SQL Server 2005. Whee.
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As I wrote about last time, hard money loan #6 should be closing soon. I don't have a specific date for when the sale will close escrow, but I am guessing it will be the end of the month.
And finally, next month, my one remaining loan from prosper.com will be paid off. I'll be glad to be able to get rid of that thing. Three of my for loans defaulted and the final one was only bringing in about $3 a month. Hardly worth the time I had to spend keeping track of it.
On a personal note, last week, I achieved my Microsoft Certified Technology Specialist certification for SQL Server 2005. Whee.
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Hard Money Loan #6 Wrapping Up
It was just a short couple of months, but Hard Money Loan #6 is closing sometime this month. No late payments and everything is in good standing. We got a call from a title company asking for a payoff amount, so the property is in escrow and will be sold. I should have my funds back by the end of the month.
There is also another apartment investment opportunity on the table right now. This is another apartment complex in the Houston area and is being offered by the same group that found Multi #1. The terms are close to the same and in other circumstances, I would invest in this property. However, this investment only distributes profits quarterly and right now I am looking for something with a monthly distribution. That likely means another mortgage on a single family home, like HML #6 was. I also like having a combination of short term and long term investments. The apartment investments are typically for 3 to 5 years while the hard money loans are 1 year or less.
There is also another apartment investment opportunity on the table right now. This is another apartment complex in the Houston area and is being offered by the same group that found Multi #1. The terms are close to the same and in other circumstances, I would invest in this property. However, this investment only distributes profits quarterly and right now I am looking for something with a monthly distribution. That likely means another mortgage on a single family home, like HML #6 was. I also like having a combination of short term and long term investments. The apartment investments are typically for 3 to 5 years while the hard money loans are 1 year or less.
Hard Money #6 Cashflow Day
I got my first payment from Hard Money loan #6 today. I also got copies of the paperwork - mortgage, loan servicing agreement, etc. One thing that is slightly different about this loan is the payment due date and overdue dates. Normally, payments are due on the first of the month and overdue if not received by the 15th. This loan however, has payments due on the 7th of the month and overdue if not received by the 17th. No big deal. Just a bit different. Note that this setup actually gives the borrower less time before a payment is overdue - 10 days versus 15. Not that I expect any late payments.
In reviewing the paperwork, I noticed one other thing different than I mentioned before. I originally said the property was bought at auction for $272,000 and the lender was owed $488,000. Turns out, the lender was owed $524,000. That doesn't really matter, as the important figure is what the house is worth now - which still is around $300,000 to $350,000.
In reviewing the paperwork, I noticed one other thing different than I mentioned before. I originally said the property was bought at auction for $272,000 and the lender was owed $488,000. Turns out, the lender was owed $524,000. That doesn't really matter, as the important figure is what the house is worth now - which still is around $300,000 to $350,000.
This Is Why I Want Passive Income
A week ago today, I was laid off from my day job of over 3 years. No warning, of course. I did survive two previous rounds of layoffs, so I suppose I can't ask that my luck hold out much longer. I did get a decent severance package and I already have a couple of interviews lined up. However, I don't like the idea that my income can be taken away at a moment's notice. Hence, my quest to get multiple streams of passive income.
Luckily, another opportunity came my way not long after I was laid off - call this one Hard Money #6. This is another mortgage lending deal that will earn me a 10% ROI. The property is in Livermore, California and was bought at auction by an investor who owns 10 properties in the area and knows the location well. He's already rehabbed 12 houses this year and netted about $500K of profits. His purchase price was $272K. The mortgage, of which I am a partial investor, is for $210K. The lender was owed $488K. Current market value of the property is about $350K. A conservative estimate would be the low $300Ks. So using a conservative value of $300K, we're at a 70% loan to value ratio. The property is a 3 bed / 2 bath, 1,125 square foot house built in 1955. The mortgage is interest only for 1 year with a ballon payment of the entire principle due at the end of the term. We expect the loan will be paid off via refininacing or a sale in 6 months.
I'm not going to replace my day job with income from this loan, but it is nice to have some extra funds coming in. And it's nice to know I have some options out there for generating income.
On another note, I'm starting to see more professional investors return to buying properties at auction lately. Maybe things are going to be turning around soon for real estate.
Luckily, another opportunity came my way not long after I was laid off - call this one Hard Money #6. This is another mortgage lending deal that will earn me a 10% ROI. The property is in Livermore, California and was bought at auction by an investor who owns 10 properties in the area and knows the location well. He's already rehabbed 12 houses this year and netted about $500K of profits. His purchase price was $272K. The mortgage, of which I am a partial investor, is for $210K. The lender was owed $488K. Current market value of the property is about $350K. A conservative estimate would be the low $300Ks. So using a conservative value of $300K, we're at a 70% loan to value ratio. The property is a 3 bed / 2 bath, 1,125 square foot house built in 1955. The mortgage is interest only for 1 year with a ballon payment of the entire principle due at the end of the term. We expect the loan will be paid off via refininacing or a sale in 6 months.
I'm not going to replace my day job with income from this loan, but it is nice to have some extra funds coming in. And it's nice to know I have some options out there for generating income.
On another note, I'm starting to see more professional investors return to buying properties at auction lately. Maybe things are going to be turning around soon for real estate.
