Apartment Update

Received the November report for the Houston apartment complex and it was not good. Occupancy has dropped to 89% with 26 move-outs, 12 of which were without notice. So rent concession costs increased to fill the empty units. Expenses are still going lower, which is a small positive. Some exterior wood replacement needed to be done that cost $31,000 but that was paid directly from the replacement escrow account with our lender, so it did not affect...

And Now For Something Completely Different

I wasn't going to write about this, but since it's the holiday season, I figured now would be a good time.About a year ago, I came across Kiva.org, a microlending site. It's similar to Prosper.com in that it works by people lending money to other people. The difference is the other people are in third world countries and are taking small loans to help improve their situation by opening or expanding a business. Kiva charges no fees and 100% of the...

Hard Money #22 Started

It took just about a week, but my funds from HML #17, which closed on the 21st, have found a new home.Our best borrower picked up a triplex at a foreclosure auction. The property is in San Lorenzo, California and went at auction for $331,000. Our loan is for $210,000. The property square footage is about 2,600 although the MLS listing for it does not give a square footage. As we did with the last...

Hard Money #21 Started, #17 Closed

Well, since the last loan fell through due to the property owner filing bankruptcy prior to the foreclosure auction, I had some funds available for a loan. Luckily, my partner found a good one fairly quickly.This is an occupied duplex in Hayward, California. As it's occupied, we don't have any indication of the state of the interior, but the exterior looks to be in good shape and looks to be well...

HML #20 Started - Possibly (Updated)

I've been falling a bit behind on my blogging here. A hectic pace at work and a recent battle with the flu have been sucking up all my time. But today I managed to squeeze out a few minutes so here's the latest...Back in the first week of October, my partner found another property to lend on. This is a single family home in San Leandro, California. The exterior looks to be in good shape, but the property...

Latest Update

Got a request from an escrow company for a payoff amount on hard money loan #17, so that should be closing soon. Another short loan - just 5 months.Got an update on the Houston apartment complex a couple of weeks ago for the month of August. It wasn't a good month. Our occupancy stayed stable at 93%, but expenses were up. The main culprits were higher utility bills during the summer - water and electricity are running about $10,000 more per month...

HML #18 Closed Yesterday

Supposedly HML #18 closed yesterday. My partner should see the funds hit his account today. This was a pretty short loan - only 3.5 months! On to the next investme...

Hard Money Loan #19 Started

My loan #16 was paid off last week, so my partner was on the lookout for a new loan to make. He found one almost immediately. This new property was bought at auction by one of our regular borrowers. He was the only bidder. He got the place for about $63,000. My partner estimates current value to be about $95,000 and after repaired value to be $120,000. Our loan is for $42,000, giving us a LTV of 44%...

HML #16 Paid Off

My hard money loan #16 was finally paid off last Friday. That was a relatively short 8 month loan. My partner is looking for another opportunity n...

July Update

Things have not been too eventful lately.. Hard Money Loan #16 was supposed to be paid off a week ago, but apparently that sale fell through. My partner contacted the escrow company a couple times to try to give them a payoff amount, but his calls were never returned. And we just received another regular loan payment, so all indications are the sale fell through.Also received a payment on hml #17. Payments have been coming in on that one like clockwork.Unfortunately,...

HML #18 Started Two Weeks Ago

Started another hard money loan. Actually, this one started about 2 weeks ago, but seems to have gotten lost in the shuffle. My partner had an influx of about 6 loans to fund and he mislabelled some emails so it was pretty confusing with all the properties flying around.Anyway, this property is San Leandro and is a 900 square foot, 3 bedroom, 1 bath single family home. It was built in 1942. It was...

Off Topic Follow Up

Although I never heard back from "Al" after my last email, I did get a new spam message today that made me laugh:Dear Beneficiary; We are mandated to transfer you the total sum of $250,000Usd via Western Union by the United Nations,ECOWAS and the Nigeria Government/World Bank to compensate you on the past experience had with scammers and internet fraudsters, I have on a good authority email you the MTCN and sender's details to enable you pick up...

Completely Off-Topic

This has nothing to do with real estate, but it was amusing to me and I just wanted to share it with people.A week ago, I got a spam message from someone claiming that someone in Nigeria was trying to wire me $500,000 dollars. I reported the message as spam, but I decided to reply and see how much I could play with the person. Turn out, quite a bit.. Everything listed below is real and unaltered - the only change I have made is to hide my email address...

Rolling Along

My funds from the closed loan #13 have been reinvested in a new hard money loan #18. This one is actually a pretty sweet deal for the borrower. The property is a 4 bed, 2.5 bath two story single family home built in 1979. The property was purchased at auction for $105,000. Our loan is for the full amount. The property is currently occupied. The exterior looks to be in fairly good shape - new paint...

Loan Closed And A Possible New Investment

Hard money loan #13 closed today. Not sure how the borrowers made out with this investment. I'm pretty sure they lost money, but don't know how much. Not that it's any of my business. It'll be interesting to see if they ask to borrow from us again. I've got no problem lending to them again - after all, they always paid on time. I'm just curious to see if their loss sours them on flipping or not. My funds are sitting with my partner waiting for the...

Bankruptcy Law Allows Home Owners To Dump Second Mortgages

The Mercury News has a story about a legal loophole people in the Bay area in California are using to wipe out the second mortgages from their home through filing for bankruptcy. It works like this: if you want to stay in your home, the law forbids wiping out your first mortgage via bankruptcy. However, if the value of your home has plummeted and you are now under water, your second mortgage now becomes unsecured debt because your house does not...

Hard Money #13 Closing After All

Well, after writing all that up, it would seem the loan is going to close soon. My partner got a call saying we would be paid off in a couple da...

HML #13 Was Due Yesterday

Yesterday was the due date for our note for hard money loan #13. The property has still not been sold and the borrowers would like a three month extension. The borrowers were first time borrowers with us. We haven't had any problems with them - they pay on time through automatic payment with their bank. It seems the problem is that they aren't too knowledgeable about the rehabbing process.The property has been on the market for 6 months. My partner...

Another Hard Money Loan Started

After a longer wait than normal, my partner found a new hard money loan to roll over the principal from HML #15 into. The new property is a 3 bed, 1 bath single family home in San Leandro, California, built in 1942. The borrower bought the property at auction for $194,000. Our loan is for $143,700. After fix up value of the property is between $231,000 and $260,000. Using the lower number gives us...

March Apartment Update

Got the management report and the March financials for the Houston apartment complex yesterday. Things continue to look good. Occupancy remained steady at 93% and revenue stayed about the same as February. Expenses due to marketing, turnover, utilities, and property taxes dropped. The property had a positive cashflow of about $7,500 for the month - a nice change after running in the red for so long. The property is also in the black to the tune of...

Bank Of America CEO Agrees - Your Home Is Not An Asset

Today, the C.E.O. of Bank Of America, at a summit of state attorneys general, said that some people should not think of their homes as an asset. He was only referring to people who live in areas where there is low population growth and where, therefore, demand for housing won't create pressure to increase home values.Personally, I agree. Even though I stopped reading his books years ago, I still subscribe to Robert Kiyosaki's definition of an asset...

Random Musings On Investing In Stocks vs. Real Estate

I was checking out my various IRAs the other day and was struck by how much better I feel about my self-directed IRA than I do my traditional (stock-based) IRAs. Most people’s retirement savings are invested in the stock market (including the majority of mine). But when I compare that with my self-directed IRA which is investing in hard money lending, I can’t help but notice how differently I feel about them.Yes, stocks historically have risen over...

Groupon Gets Into Real Estate

A real estate brokerage in Chicago is selling $1,000 discount coupons on Groupon. They are good for $1,000 cash back at closing and it's good for owner-occupants and investors. The coupons are good for one year and a total of 50 must be sold (at $25 each) for the deal to become valid. The pruchase price of the house must be over $150,000. If you invest in the Chicago area, this might be a good de...

A Newbie Investor's Tale

Wow.. found this blog of a guy in Utah who bought an investment property in Florida. This was his first investment property, bought at the peak of the housing bubble and, as you might imagine, things didn’t quite turn out the way he had hoped.Reading this, I am struck by several things. There were a huge number of red flags that should have alerted him that something wasn’t right. First, he got into this investment after hearing about it from a friend,...

Shaun Gets Nostalgic

I recently spent some time reading Savvy Saver’s blog – particularly her posts about her 4-plex and how that investment has been going for her. She’s had it for 4 years now and it seems to be going well. She and her husband are managing it themselves, so they do have the occasional tenant headache they have to deal with, but all in all, it seems to be doing well for them. I am encouraged that they have held the property this long and that they didn’t...

February Apartment Financials

Before I get into the latest financials for the apartment, let me say the Chez Cliff blog has shut down. Cliff started out blogging about REI and, after being laid off, moved into a consultant role and steered his blog in that direction (very similar to what Kenric has done.) Cliff's last post mentioned that he didn't want to be posting on his blog just to post. I can understand that. It's easy to fall into the trap of feeling like you have to post...

Self-Directed IRA Is Now Profitable

Last year, I started the process of converting one of my IRAs to a self-directed Roth IRA. It took about 5 months to get it all set up, but it's been rolling along for a while now. I'm pleased to say that, as of last month, it has become profitable. What I mean by that is I incurred about $3,500 in setup expenses to get the everything transferred and the LLC set up. With last month's hard money payment, I have now recouped all those setup expenses...

HML #15 Closed And Apartment January Financials.

Escrow closed on this property on Monday, so hard money loan #15 was paid off. Looking for another place to invest now.The January financials for the apartment have arrived and, as we expected, things continue to improve. Occupancy increased to 93%, up from 88% in December. Revenue increased by $5,000 and management expects the same increase for February. Our property tax impound amount will drop by about $8,000 per month with the March payment following...

Another Hard Money Loan Started

Hard money loan #16 kicked off a few days ago. This is a loan on a property bought at foreclosure auction in Antioch, California, which is east and a tiny bit north of San Francisco. The borrowers are two people who have borrowed from us before. They purchased the property for $220,000. (The bank took a $400,000 loss on this one - ouch!) Our loan, secured by a first mortgage, is for $162,000, giving a LTV ratio of 73%. The borrower tells us he already...

Apartment Had A Bad December

The financial report from the Houston apartment complex for December was not good. Occupancy dropped to 88% due to a large number of move outs in November. About 40% of the move outs were people who left without notice. This most often happens after a job loss, so it would seem November was a bad month for unemployment in Houston. The good news is occupancy is currently back to 92% with 96% leased. Still waiting for the clarification on the difference...

Risk Factors That Will Increase Your Mortgage Rate

Fannie Mae has a matrix (PDF) that shows what risk factors will increase your mortgage interest rate and by how much. Of note to real estate investors: investment properties will add at least 1.75%. (But then, we all knew mortgages for investment properties cost more.) The matrix also shows how much your rate will increase based on your credit score. They also give the adjustments for condos, manufactured homes, 40 year loans (as opposed to the normal...

Common Sense Prevails

Last Friday, the Massachusetts Supreme Court ruled that two banks did not have the right to seize homes from two parties because they could not prove the banks owned the mortgage at the time of foreclosure. While this will undoubtedly slow down the foreclosure process and reduce the inventory of properties for investors who make money off foreclosed homes (of which I am one), I have to applaud this decision. It seems like a pretty basic idea to me...

Hard Money Loan #14 Paid Off

The property behind hard money loan #14 was sold and closed escrow on December 30 and I received my final payment today. The loan lasted about 6 months. My principle is sitting with my partner, waiting for the next opportunity.In other news, my wife and I are starting a remodel of a couple rooms in our house. We're paying for this using our HELOC, which I had previously been using for investing. Actually, I'll still be able to use my funds from that...