Wednesday, November 19, 2008

Multi #1 Monthly Udate

I just received the latest monthly update for my investment in the apartment complex in Houston. Believe it or not, occupancy has increased AGAIN and is now at 97%. This is phenomenal and beyond my expectations. It surely cannot be maintained!

Total revenue has increased to over $195,000 last month, which is the highest revenue figure yet. As mentioned last month, rent concessions are down, which resulted in rental income increasing by about $7,000.

Some areas still ran over budget - admin expenses and landscaping. The increase in admin costs was due to one time charges for setting up check scanning direct deposit services. Landscaping was higher due to seasonal planting. Apartment turnover costs increased (but were still under budget) due to the increase in occupancy.

Net income for the property for the month was almost $25,000. A very nice month indeed!

Monday, November 10, 2008

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.