July Update

The July figures from the apartment complex look good. Overall, they've dropped a bit from June, but not significantly. June was the sixth consecutive month of increasing total income, so I expected that to end sooner or later. Total income for July dropped by $4,000 and occupancy dipped to 90%. Offsetting the lower income were lower payroll and utility payments, so we had a net gain in monthly profit. However, the property overall was above break-even, which is a first for this year and, if I recall, the first for maybe 1 or 2 years. Good news indeed.

My four hard money loans continue to pay on time. Several other loans my partner has have closed recently and I expect some, if not all, of my loans to be closed soon. Three of them aren't approaching their 1 year due date, but based on past experience with the borrower, the properties are probably up for sale or in escrow right now. One of my loans has actually gone the full 1 year term - something that rarely happens. This note was due this month. Haven't heard any word on a payoff yet though.

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Loan #24 Started

Last week, I took my money from the close of HML #21 and put it to work in a new loan. The new property is a single family home in San Pablo, California. the property was purchased at a foreclosure auction by one of our best clients, who is also personally guaranteeing the loan. The purchase price was $111,600. My partner estimates the current as-is value to be $120,000 and the after repairs value to be $140,000. Our loan is for $74,000, giving us an LTV of 61% of the current value or 53% of the repaired value.

There are a fair number of comps for this property, ranging from $120,000 to $165,000, so our after repair value is smack in the middle of that range.

The property is a 3 bedroom, 1 bath home of 958 square feet. It was built in 1950. It's got a one car garage and sits on a 5,000 square foot lot. My partner's assistant rates the neighborhood as a C-, which is typical for most of the loans we make. He rates the loan safety as a B, given the low LTV ratio.

The exterior appears to be in average condition. There are no readily visible problems with the roof or foundation. The condition of the interior is unknown. There was at least one other bidder at the auction for this property.

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