Shaun's Real Estate Adventures

Loan #24 Started

2012-05-16T06:58:00.000-07:00

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.

Houston Apartment Turnaround?

2012-05-04T09:12:00.000-07:00

I finally got the March numbers for the Houston apartment complex. Numbers were generally comparable to February - rent income in both months were up $10,000 over January numbers. Admin expenses were up $2,000 over February due to some legal bills incurred in working out late payments with vendors. Net income continues to improve, going from -$30,000 in January to -$10,500 in February to -$8,000 in March.

But a closer look reveals things may not be as rosy as they seem. One line item expense went from $2,000 in January to $3,000 in February to zero in March. This item? Security Services. No explanation was given and I've emailed management to ask what happened. If they got rid of security services, that might help the monthly bottom line (if you put it back in, we'd have basically the same net income as February), but we could get hit with vandalism repair bills in the future. I'm interested in hearing management's explanation for this.

But the better news is, because this report was so late, they were able to look at preliminary numbers for April and things look much better. April's total income looks to be $10,000 higher than March's and the highest revenue number since November 2010! Additionally, for May, the apartments are 95% occupied and 99% leased. This is due to increased marketing efforts and, according to management, an improving economy in the property's market area. Marketing costs in March rose $1,000 from February and rent concessions rose about $3,000. We'll see how those numbers compare to April. I should also note that, while rent concessions rose, the total amount is still $1,000 under the budgeted amount. This was pretty much offset, however, by the marketing costs being $1,000 over budget.

We've seen strong months come and go with this property. Things seem to improve for a couple months, only to fall back down again later. Hopefully the improvement will be sustained this time. That 99% leased number is quite encouraging.

Loan #21 Paid Off

2012-04-30T09:27:00.000-07:00

HML #21 was paid off last week so those funds are now looking for a new home. My other three loans are paying on time.

Still haven't received the March financials for the Houston apartment complex. They seem to be coming later and later these days. I know the management company reduced staff to help with the cashflow and I'm wondering if this is a result of that.

February Update

2012-03-26T08:52:00.000-07:00

Things are looking better at the Houston apartment complex. Of course, the previous times I’ve said this it’s usually turned out to be a short-lived turn-around, but still, a good month is a good month. Rental income increased in February by almost $10,000, mainly due to decreased rent concessions. This month saw the highest rent revenue since April 2011. We had t pay out $3,800 for some repairs to the roof and access gate, but other expenses are running according to budget. Management implemented a water conservation plan and that has resulted in significantly decreased water and sewer bills. They are now moving forward with a gas billback program. This means the residents will start paying a portion of the gas bill. They currently pay a portion of the water bill and with the reduction in that expense, management feels the gas billback will be accepted by the tenants. They should still have an overall lower billback cost than they had prior to the water conservation program. They also installed a separate water meter for landscaping so they can begin a billback program for landscape water usage.

Now, it’s been a long time since I lived in an apartment – at least 20 years. Maybe things have changed since then, but I know I never paid any sort of utility billback for general landscaping or anything. I paid my rent and that was it. If I recall, the units were individually metered and all the utilities were in my name, so that might be part of the reason. Off hand, I can’t remember how the units in the Houston complex are metered. It just seems strange to me to bill renters for water used for landscaping. Of course, this might also be a regional thing too. If that’s how things are done in Houston, then it makes sense that we do it too.

Last month, management asked the investors to inject another $250,000 into the property to help it get through the current rough financial situation. I opted not to contribute and apparently, I wasn’t the only one. They raised $140,000, well short of their goal. However, they are using this money to catch up on payments with vendors who we still owe money to. Management is also using the funds to make ready more units to help improve the occupancy number. They didn’t give an occupancy percentage with this report, but if I use the gross rent and vacancy numbers from the financial report, it looks like we are at about 91% occupancy right now.

On the hard money lending side of things, I didn’t blog about it, but my partner said last month that things seemed to be picking up and he was short of funds. Well, a lot can change in a month and things have now reversed and he has money waiting for investments. Our main borrower says deals have slowed down a bit, although he is still buying a couple properties a day. A short time ago, he was doing two to three times that amount. As my partner says, the business is often cyclical and he has learned to be patient and wait for good deals rather than invest in questionable deals just to get funds invested in something. That's how you go 20 years in this business without losing a penny of your investors' principle.

On a more personal note, I got my taxes back from my accountant this weekend and I got hammered on my federal taxes. I owe a couple thousand. I wasn’t sure how that could have happened until I remembered that in 2010 I converted a traditional IRA into a Roth IRA and elected to report the income over two years. I should have adjusted my withholding rate last year to help alleviate this, but I guess I forgot. The good news is that next year, I won’t be hit with another big tax bill (hopefully), as that conversion has now been fully reported. The Houston apartment complex gave me a roughly $7,000 passive loss I can claim. Unfortunately, it can only be used to offset passive gains, of which I have none. So that loss will just get carried forward until I have some passive gains I can use it against. I had thought that the interest from my hard money lending was passive income, but my accountant reminded me it is not. Based on my current investments and future outlook, I think this loss will probably end up being carried forward until the Houston apartment is sold. But that’s OK. It just means I’ll be getting a nice surprise in the future, as I’ll probably forget about it. That actually happened to me this year on my state return. I had a $400 credit from 2009 that was carried forward, adding to my state tax refund this year.

Hard Money Loan #23 Started

2012-02-29T13:01:00.002-07:00

I started a new hard money loan this week, bringing my current outstanding loan count to 4.

This one is on a single family home in San Pablo. It is currently occupied. It's a 2 bedroom, 1 bath, 856 square foot home built in 1950. The roof and foundation look to be in good shape and, other than the garage, the paint is in good shape. We were unable to see the inside of the home, but pictures of the interior on MLS show it seems to be in good shape. The landscaping is in good shape too. It appears to have newer windows and the kitchen has been redone with granite and stainless steel appliances.

The property was listed as a short sale on the MLS at $175,000. There is another property down the street, similar in size and condition, that is also listed as a short sale for $175,000. It sold in seven days, but we don't know what the actual contract price was since it was a short sale. The neighborhood is just OK. My partner's helper rates it a "C". The property is near a large regional park, so there aren't many nearby houses for comps. The original owner bought the property in 2004 for $378,000. There was competition at the auction for this property, so other investors wanted it. Our borrower got it for $129,000. Our loan is for $105,000. We conservatively are valuing it at $160,000. That makes our LTV 65.6%. My investment in this property is smaller than normal, since it's being done with funds from my daughter's UTMA account, as I mentioned a couple weeks ago.

My other loans continue to pay on time. Ho hum.

A Handy Tool For Landlords

2012-02-17T08:43:00.000-07:00

I came across a handy little website the other day that I though might be useful for landlords or anyone else who needs to send certified or return-receipt letters. Send-certified-mail.com provides an easy way to send out a certified letter. You can also get an electronic proof of delivery or electronic copy of the recipients signature.

If you want to use the service, you simply upload your letter as a PDF or Word file and enter the mailing address and your return address. The accept Paypal for payment. There is no monthly subscription fee to use the service. You only need to pay when you actually mail something.

I found their prices to be reasonable. It may cost a dollar or two more than if you took it to the post office yourself, but being able to send a certified letter from your computer sure beats having to trek down to the post office.

I believe the company is based on the East Coast, so that is where your letters will be mailed from. If you upload your document and pay prior to 11 AM Eastern time, it will be mailed that day. I did experience a quirk that briefly caused me some worry: When you upload your letter, it will appear for a while on their website under a section titled "My Uploaded Letters." Once, it is printed, it will disappear from there. Don't worry - the next day it will reappear in the Letter Tracking section.I've heard from their customer support that they will be revamping their website soon to make things more clear.

Apartment Update And 3 Year Outlook

2012-02-14T08:40:00.001-07:00

As Another Investor predicted about 2 hours before it actually happened, investors in the Houston apartment complex got a request to contribute more cash. The management company is asking for a total of $250,000 more from investors to make it through the year.

Management sent out budget projections for 2012 through 2014. The projections assume the complex will be sold at then end of 2014. (The original plan at purchase was to look at selling the property after 5 years, or in 2013.) Also, buried in a footnote, it says the projection also assumes no distributions of cash flow will be made to investors during 2012, 2013, and 2014. The monthly projection for 2012 shows the property losing money each month until June, when it returns to profitability for the remainder of the months of the year. Still finishes the year with an overall loss though.

The analysis also includes a look at the Houston economy and apartment market. In short, its been a very bumpy ride. Unemployment drops for a few months, then shoots back up one month, then drops for a couple more months. Occupancy at the property has consistently trended about 3 percentage points higher than the Houston apartment market in general, so that's one positive. However, that appears to be a result of having rents about $10 to $35 lower per unit than the market average.

Management predicts 2012 will be a turnaround year and the property should achieve breakeven status mid-year and return to profitability for 2013 and 2014. Management continues to defer their management fees to help keep expenses down. (Their contract gives them a percentage of the profit when the property sells, so they have a vested interested in getting the property back in the black.) The property itself is in good physical condition and should benefit from an improving economic environment.

Looking at selling the property at the end of 2014 using a 6.5% cap rate, they figure investors will get an annualized ROI of 10.77% on their initial investment. Just for the heck of it, I went back and looked at the original projections made at the time of purchase. The sale price after 5 years was $2 million higher than the current sales price projection and the investor's ROI was 20%.

Of course, management is trying to paint a rosy picture. Everything pretty much depends on the Houston economy picking up again. It looks like it is on the mend, but it is a very slow process which seems to be subject to frequent setbacks.

So.. Where does that leave us investors? Management says the property is operating very close to break even and with an additional $250,000, should be able to make it through 2012, after which they see the economy picking up. Investors are being asked to contribute a pro-rata share of $250,000 based on their initial investment amount. The investment was sold in $50,000 blocks, so they are asking for an additional $4,545 per block that you own. Investors are not required to contribute more, but if they do not, management warns that "alternative financing sources will be considered," which may or may not be available and will probably come with high interest rates and/or investment participation (meaning the lenders would become part owners of the property in exchange for lending funds). If any members do not fund their pro-rata share, the members that are contributing more will be contacted to see if they are willing to make up the shortfall before any alternative funding is obtained. Of course, everyone's ownership percentage will be adjusted to reflect any additional capital input. And should all that fail, losing the property to foreclosure is a possibility.

I think I'm going to pass on this. I might have contributed had the projections included some cash flow back to investors at some point, but it doesn't. I've always looked at this investment as a capital gains play. While I do appreciate the potential capital gains, over the past couple of years investing, I've realized I enjoy cashflow more than capital gains and I believe I can put my funds to better use elsewhere. That said, there are risks involved with not providing the additional funding. If the other investors do not step up, management might be forced to get a loan at a high interest rate, further reducing profits and increasing the time it takes to turn the property around. Or, they might need to give up some ownership of the property, which would reduce my share and hence, my return on my investment. And foreclosure is always a possibility, although I seriously doubt it will come to that.

First Update Of 2012

2012-02-13T14:11:00.000-07:00

Wow.. I can’t believe I haven’t updated this blog since December! Truth be told, there isn’t much happening. My three outstanding hard money loans continue to pay on time. I haven’t received an update on the Houston apartment since last time, so there isn’t a whole lot to tell there. I’m assuming performance of that still sucks or we would have heard something. I did make a decision to go a bit further into hard money lending. I’ve got some money in a UTMA account for my daughter that has been languishing in the stock market for the past 5 years. I finally got fed up with seeing it sit there doing nothing and have liquidated the stocks and will be switching those funds to HMLs as soon as the trades settle and my brokerage can get me a check. I have noticed in the paperwork I get for some of my existing loans (trust deeds and recorded docs and such), other people I lend with have done the same thing.
In somewhat-related news, my self-directed IRA is getting up there in value. I think in the next couple of months, I’ll split that investment into two loans just to provide a bit of diversity. It’s not diversity in the stock market sense of the word, as both loans will be in the real estate sector and the same geographic area (probably), but the loans will be on two different properties, possibly with two different borrowers. I need a couple more months of interest payments before doing this though, in order to satisfy the minimum balance requirement for my bank account before I withdraw the funds.
The market seems to be picking up in the California Bay area. My partner says for the first time in a long time, he has more requests for loans than money to fund them.

Apartment Update

2011-12-29T12:45:00.002-07:00

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 cashflow. The manager's report includes this ominous phrase: "...outstanding aged accounts payable continue to place considerable strain on property operations." Total revenue for November was $175,000 and the balance sheet shows $233,000 of Accounts Payable, so yeah, I can see that would cause a strain.

Truthfully, I am getting tired of this investment. I don't think the investors have gotten a payment in over a year. I know the problem is high unemployment and the soft economy, but it gets pretty old hearing month after month that the place is just limping along. This investment was made with an eye towards capital gains, not monthly income, so I need to keep that in mind. Still, it is somewhat frustrating to know there is little that can be done to turn things around. I guess I am still used to the rehab mindset of being able to improve a property and sell it.

I'm starting to see why my hard money lending partner likes lending so much. Rentals require dealing with tenants and repairs, etc. Investing in apartment complexes does too, although a management company keeps those factors one step removed from the investor. Hard money lending on the other hand, is relatively hassle-free, once you have a set of good, regular borrowers lined up. Lending also lets me spread out my investment over several properties, reducing the risk from any single one. I think once this apartment investment ends, I'll stick to hard money lending. You do lose out on all the nice depreciation deductions and tax-deferral options though.

And Now For Something Completely Different

2011-12-23T07:22:00.000-07:00

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 money you lend goes to the borrower. Like Prosper, you can search lists of people looking for loans and select the ones you want to lend to. But, and here's the reason I originally wasn't going to write about this, the lender (you or I) gets no interest. There is no return on investment for the lender other than the satisfaction of helping someone in another country improve their lot in life.

Kiva works by teaming with field partners in various countries who are the ones who actually fund the loans and collect payments. More information can be found here. The borrower does pay interest on the loan, but that is kept by the field partner.

As with Prosper, there are risks - namely that your loan won't be repaid. Additional risks involve currency exchange rates, political unrest, and all the other risks that come with investing in another country. But Kiva lets you start lending with as little as $25, which is what I've started with. If my loan defaults, I'm only out twenty five bucks. I can handle that. I've made one loan so far to a woman in San Salvador to expand her business of selling cosmetics and small household appliances. The loan was for 20 months and is 55% repaid. My sister-in-law has been lending through them for a couple of years and has made 3 or 4 loans so far.

If this sounds like something you are interested in, please check out Kiva.org. Have a happy holiday season!

Hard Money #22 Started

2011-10-31T12:50:00.000-07:00

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 property, we pulled comps using both residential and income property searches on the MLS. Income property comps show up at $315,000 for a 4-plex that is smaller than the subject property and another 4-plex listed at $725,000 but that's bigger than the subject property. There is a triplex that sold recently for $329,000 that was smaller.

On the residential comp list, we had about 12 properties, all that were smaller than the subject and all on smaller lots. Highest priced one sold for $335,000.

Based on rents of single family homes in the area, my partner estimates the monthly rental income to be about $1,200 per unit. (The subject property is really a single family house with a duplex in back.)

Our borrower estimates the property to be worth $500,000. I'm not sure how he gets a figure that high, but he knows the area better than me and comps are pretty hard to come by, as usual for triplexes. The property has tenants in place and they have indicated they want to stay. We have not seen the inside, so we don't know the condition. The roof appears to need some work. Our borrower has experience in the area - he actually rehabbed the property right next door, which is a 1,000 square foot SFH that he sold for $280,000 back in August. My partner was his lender on that project too (although I wasn't).

Our LTV based on the sales price is 63%. Should we have to take over the property, we'd get an income-producing property generating about $29,000 per year for $210,000. Not bad. Our loan terms are our standard - 12% interest only loan, 1 year term. And with this deal, all my funds are fully invested again!

Hard Money #21 Started, #17 Closed

2011-10-24T08:41:00.000-07:00

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 maintained. The building is about 2,100 square feet and was built in 1957. It's got a 2 bed /1 bath unit and a 1/1 unit. The property was listed for sale back in 1999 for $280,000 but it did not sell. The comments in the listing indicate there is a studio behind the main building, so this might actually be a triplex. However, as we are unable to verify that, we are evaluating it as a duplex.

Rents total approximately $2,000 a month, although this is not confirmed. (Figure is based on the old MLS listing trying to sell the property in 1999.) The sell price at the auction was $233,000 - the opening bid price. Our mortgage is for $137,000. My partner pulled comps for both residential properties and income properties. Comps are a little spotty, as there are not many similar properties nearby. The city is average, but the property itself is close to Castro Valley, which is an above average city, so that will help the property value. Comps vary from $270,000 to $600,000, but there are none that are a good match. Our conservative estimate of value is $275,000, but my partner thinks that could be off by $50,000 in either direction. The buyer, our good customer again, thinks it's worth $325,000. Overall, this actually appears to be a safer investment then the one that was canceled last week.

Pros: Borrower is our good customer who typically pays early. He's got a well-established history of success and paying on time. He is personally guaranteeing the loan. Based on the sales price, our LTV is 58%. If we had to take over this property for non-payment, we'd get an income-producing property generating about $2,000 a month on a $137,000 investment. That's a pretty good worst-case scenario.

Cons: Our borrower is personally guaranteeing over 40 loans. It's unclear what the current leases are and what the interior condition is. Comps are hard to come by. If we had to foreclose, duplexes take longer to sell.No one else at the auction bid on this. Do they know something our buyer doesn't?

After going over the 10 pages of documentation my partner sent me, I decided to go ahead and invest in this one. This one I'm labeling hard money #21.

In other news, hard money loan #17 was paid off on Friday, so those funds are now looking for a new home. Back in May, when we made the loan, we estimated the after-repaired value of the property to be $195,000. The actual sales price was $210,000, so our estimate was pretty conservative. No problem with that, but I just like looking at how our estimate compares with the actual sales price. The borrower was a new customer for us and it's good to see he seems to know his stuff.

HML #20 Started - Possibly (Updated)

2011-10-17T10:22:00.000-07:00

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 is occupied, so we don't know what the inside is like. The location is not that great - it's near a freeway offramp. The property was purchased at auction for $197,500. The opening bid was $170,000. The buyer is one of our best customers and is personally guaranteeing the loan. He normally pays early.

Comps are hard to come by for two reasons: First, there aren't many in this area. Second, there is some confusion about the actual square footage of the house. The MLS listing says it is 1,080 square feet, but county tax records say it is 880 square feet. Using the lower figure, we estimate the value to be between $200,000 and $225,000. There is a comp that has the same square footage (880) but has a better location that recently sold for $275,000. How much is location worth? $50,000?

Our loan is for $136,500. Using the lower comp value, this gives us a LTV of 68%.

I went ahead and invested in this one, mainly on the reputation of our borrower. Found out on Friday that the owner is claiming he filed bankruptcy before the auction. This happens with about 5% of the properties at auction and I'm surprised it hasn't happened to use before. No final resolution yet. The next step will be the trustee will have to examine the auction documents and the bankruptcy documents to see which was filed first. If indeed the bankruptcy was filed first, we get our money back, the sale will be voided, and the house still belongs to the old owner.

Update: Turns out, the bankruptcy was filed before the auction, so the sale has been voided and our money has been returned.

Latest Update

2011-10-03T07:38:00.003-07:00

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 than they cost in the winter months. The good news here is that those bills should start declining. Management has said the September bills are running about $7,000 lower than August.

Another expense was an "extraordinarily high" number of counter top resurfaces for the 22 units that were turned over. Not sure if these were just really destructive tenants or if these units were just getting to the point where this needed to be done after several tenants had lived there. And, as mentioned previously, our loan payment has switched from interest only to principle and interest, so our mortgage went up. All these factors combined to create a negative $18,000 cash flow for the month - the largest monthly lost so far this year. And for the year to date, the property has a $10,000 loss. Unemployment in Houston is creeping up again and management is warning that we may start seeing higher turnover as tenants move out due to lost jobs.

HML #18 Closed Yesterday

2011-09-16T07:56:00.001-07:00

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 investment!

Hard Money Loan #19 Started

2011-08-29T06:00:00.001-07:00

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% based on current value and 35% at repaired value. The borrower, again, one of our best borrowers, is personally guaranteeing the loan. My partner was willing to fund this one with all of his own money, but since I had some on hold, he gave it to me. His mother also has a small share of the loan.

The property was a rental and has an unfriendly tenant that might need to be evicted. The area isn't the best, but it's not the worst either. It is near a freeway however, so that's a drawback. The house is a 4 bedroom, 2 bath built in 1912. The interior condition appears to be average with some updating needed. The exterior paint is peeling and the siding may need some work. Again, the location isn't the best, but the exceptionally low LTV makes this a loan I am comfortable doing.

I'm referring to this one as Hard Money Loan #19.

I also got some good news from the Houston apartment complex. July occupancy averaged 93% and turnover declined to just 23 units. These two factors increased monthly revenue by about $13,000 and gave the property its highest monthly revenue figure of the year. Rent concessions also declined.

While that was good news, the bad news was the property was still in a negative cash flow situation for the month. This was due to a couple of factors. As mentioned previously, our mortgage has now switched from interest only payments to interest and principal, meaning our mortgage increased by about $8,000 a month. The hot summer months have also caused the utility payments to be higher than normal. As we enter into the fall and winter months and utility bills decline, the higher revenue should easily offset the higher mortgage payment. On a year to date basis, we are still actually about $115,000 over budget.

HML #16 Paid Off

2011-08-19T08:22:00.000-07:00

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 now.

July Update

2011-07-29T07:49:00.000-07:00

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, the Houston apartment complex has had another not so good month. After having an occupancy of 90% in May, June's figure rose slightly to 91% but that came at the cost of increased concessions. June also experienced high turnover along with the increased costs that brings (marketing, cleaning, etc). Management expects July's revenue to rebound to about $7,000 more than June.

Expenses actually declined a bit, although the utilities cost rose due to the higher temperatures of summer. Our management company has deferred their fees to help improve the bottom line. Our mortgage switches from interest only to interest plus principal in July, which will raise our monthly payment by about $10,000.

Management is still cautiously optimistic about the second half of the year and they do feel like the overall market is improving. However, the concessions given to attract tenants tend to delay those improvements from showing up in the bottom line for a bit. For the first six months of this year, we are actually running about $105,000 ahead of our budgeted net operating income, although 10% of that amount can be attributed to the management company delaying their fees.

In other news, tomorrow marks the seven year anniversary of this blog!

HML #18 Started Two Weeks Ago

2011-06-10T08:16:00.000-07:00

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 purchased at auction for $195,000. Our loan is for $144,000, giving a LTV of 74%, based on purchase price. The estimated market value after repairs looks to be $250,000. (Comps sold in January and February for $260,000 and $250,000.) The LTV at that price is 58%. The pros of the property: It's on a huge lot. Fix up costs will likely be low, simply based on the size of the house, but the condition of the inside is unknown. The cons are it backs up to a strip mall and the condition of the inside is unknown.

I should also note here there is one more potentially huge con: the borrower is under investigation by the FBI for bid rigging at foreclosure auctions. (I obviously disagree with the comments in the article about how the margins are thin in this business. I've made lots of loans here and I know that is not the case. Just look at this property for example.) This is interesting. The borrower is one of the biggest buyers of properties in the county and is our biggest borrower. My partner has a very high opinion of him. He always makes his payments early (for example, he just made a payment this week, even though his due date is the 29th of the month). My partner estimates the borrower employs about 10 or more people and runs a professional business. He typically buys 1 property a day and closes on 1 per day. He recently took out three loans with us. My partner doesn't know what the FBI will find or if he will do jail time, but he does figure the guy will probably at least face a big fine.

But based on the numbers, I went ahead and got in on the loan. If we have to foreclose on the property, we're still in good shape. I image the legal proceedings of a foreclosure when the borrower is in jail would be somewhat horrendous, but not insurmountable. And we'd have almost $100,000 cushion to work with.

Off Topic Follow Up

2011-06-09T07:05:00.000-07:00

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 the first $5,000.00,USD and confirm receipt to 
us so as to enable us wire the next USD10,000.00 by tomorrow and subsequent 
ones since we can only send USD10,000.00 a day . Please provide Your Names, 
Address, Phone Number,Country of Residence  to enable us process your first 
payment of $5,000Usd within the next 24Hours. Sender: Andy Wong, MTCN 839-309-
4906.
 
contact Info;
Mr.Paul Chavez 
Email:transferhelpdesk02@live.com
Online Director/claims agent.
Waiting to hear from you soon.

Completely Off-Topic

2011-06-07T06:55:00.000-07:00

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 for privacy.

Date: Wed, 01 Jun 2011 00:21:18 +0200
From: UBA Group info@ubagroup.org
Reply-to: ubagroup_godwill@9.cn
To: undisclosed-recipients: ;
Subject: Money Gram Transfer

There is an issue with the Money Gram Transfer
in the amount of $500,000.00 directed at the
owner of this email address. THE EX GOVERNOR OF
KANU STATE IN NIGERIA, contacted us for your
transaction a couple of hours ago. He said that
he choose to send it to an email address
instead of a name. We are unable to complete a
transfer directed at an email address, so we
require some more information in order to
complete this transfer. You are required to
provide confirmation of the following:

-The name in which you wish to receive this transfer:
-Telephone / Fax Number:
-Occupation :
-Full Address Contact:
-State/ City:
-Zip Code:
-Country:
-Age:

In order to resolve this problem, please call
our offices at +234-708-9779-324 or at this
email ubagroup_godwill@9.cn
As soon as this information is received, your
payment will be made to you in electronic wired
transfer to your nominated bank
account directly from The UNITED BANK OF AFRICA
[U.B.A] as soon as you comply with the
requirements . When calling or emailing ,
please use reference number 250-153 for our
mutual convenience.THE MANAGEMENT OF UNITED
BANK OF AFRICA [U.B.A]OFFICE NIGERIA BRANCH.
MONEY GRAM TRANSFER DEPARTMENT.
Mr. Allen Godwill

From: xxxxxxxxxxxxxxxxxx
To: ubagroup_godwill@9.cn
Subject: RE: Money Gram Transfer
Date: Tue, 31 May 2011 20:19:43 -0700

Wow! How fortuitous! My great-grandfather on my pappi's side is from Kanu!
My information is below! Please transfer the money immediately!

-The name in which you wish to receive this transfer: Jethro Beauregard
-Telephone / Fax Number: 714-143-2444
-Occupation : Exotic dancer
-Full Address Contact: 4029 E. Happy Pants Lane
-State/ City: California
-Zip Code: 92666
-Country: US of A, best damn country in the world
-Age: 47

From: UBA Group allengodwill@group.com
Date: Thu, 02 Jun 2011 04:38:23 +1000
Subject: Your Transfer Order Number is ECC/0123723/AQ11WWR.
Reply-To: ubagroup_godwill@9.cn
Return-Path: allengodwill@group.com
UNITED BANK OF AFRICA [U.B.A]
Registered office:
261 Tower Building Estate,
Gariki,Abuja,23452.
SWIFT: DABAGB2B
Switching to UNITED BANK OF AFRICA [ U.B.A]

Attention: Jethro Beauregard,

We are in receipt of your mail and the content was noted, regarding your
mail below, your questions. With reference to the option you have chosen, we
like to inform you that the ($500, 000.00 USD) would be transferred to the
account provided by you. Note that you will not be charged for transfer fee
we shall cover that charges. But the insurance company declined reverse
payment stating that if anything goes wrong with transfer that they will be
responsible, and the insurance have requested payment for their insurance
cover, this alone you will be responsible for.

You will be responsible for the payment of charges to INSURE YOUR FUNDS ,
therefore you have been billed to pay the sum of $1000.00 USD as payment
for insurance cover.
============================== ======================
Your Transfer Order Number is ECC/0123723/AQ11WWR.
============================== ======================
The charges are in this proportion because of the insurance cover we have
undertaken to covers the Funds as the insurance company shall serve all
responsibilities incase of any eventualities because the FUNDS has been
Cleared and registered and will be transferred into your account as soon as
we receive the Payments for the Insurance cover to insure the funds for
transfer.

Note the transferring process of your FUNDS cannot be complet without
receiving your payment for insurance cover.

Note: that your Transfer is going to be done Electronic Online Banking
Transfer as it will take 3 WORKING DAYS to reflect in your present
designated bank account in your country

We are glad to be of service to you.
We anticipate your immediate action on this matter of world interest.

Mr. Allen O'Godwill
Transfer Department,
Inspector Abdural Rowe,

CC: The Presidency
CC: Federal Ministry of Finance
CC: Federal Ministry of Justice

Tel: : +234-708-977-9324
Email: ubagroup_godwill@9.cn

From: xxxxxxxxxxxxxx
To: ubagroup_godwill@9.cn
Subject: RE: Your Transfer Order Number is ECC/0123723/AQ11WWR.
Date: Wed, 1 Jun 2011 12:46:56 -0700
Well shit howdy.. You tell me I need to pay $1000 but don't tell me how I'm supposed to pay you!

Of course, I'm not really sure I can afford to pay $1000. I mean, I've been saving up for this hot little g-string with flashing lights on it. It's pretty pricy, but I'm sure it will help me earn more money during my dances. How about you lend me the $1000 and I'll pay you back when the $500000 has been sent to me?

Jethro.

From: UBA Group allengodwill@group.com
Date: Thu, 02 Jun 2011 07:30:28 +1000
Subject: Attention
Reply-To: ubagroup_godwill@9.cn

UNITED BANK OF AFRICA [U.B.A]
Registered office:
261 Tower Building Estate,
Gariki,Abuja,23452.
SWIFT: DABAGB2B
Switching to UNITED BANK OF AFRICA [ U.B.A]

Attention:Jethro Beauregard,

I am in reciept of your mail and the content was well noted. In response to the mail sent to my office i wil like
to inform you that. there is no way we can loan you that money becouse this is a bank,
Befor money can be loan out there must be colataras to inssure money give out.

NOTE; The $1000.00 USD that you are to send to our Account officer is to enable us inssure Your FUNDS.

But i am expecting my monthly salaries next tomorrow which is one day from today. But it will be very deficut
for me to loan you that amount of money becuse i have family resposibility to take care of.

I know that any delay in this transfer is at your RISK.

The only thing i can do for you, I can only help you with $400.00 USD you have to pay me back once your FUNDS is being
transfer to you.

But first you will have to contact me so i can be sure and know how serius you are in paying me back my money.

My contact details is as follow;
Phone;+234-708-9779-324
Mr. Allen Godwill

NOTE; You are to send $600.00 USD First thing tomorrow to our account officer. Once the payment is comfirm
by us i will complete the amount first thing next tomorrow onec i recieved my salaries but i have
to hear from you to be sure.

Onec you ready call or contact us by phone or e-mail.

Mr. Allen O'Godwill
Transfer Department,
Tel: : +234-708-977-9324
Email: ubagroup_godwill@9.cn

From: xxxxxxxxxxxxxxx
To: ubagroup_godwill@9.cn
Subject: RE: Attention
Date: Wed, 1 Jun 2011 20:52:00 -0700

Mr. Allen,

Thank you so much for loaning me $400. You can send the money to me at:

Jethro Beauregard
c/o Chippenbales Dance Spot
4029 E. Happy Pants Lane, California 92666
US of A, best damn country in the world

Good thing you mentioned about your family responsibilities! Reminded me that I gotta send off my alimoney and child care payments. My ex wife and her fancy lawyer got the judge to say I have to pay her $300 a month! Can you believe that? I sure can't. Well, I guess I can because I got the paper from the court that says I have to and one time I tried to not pay, but the sheriff came out and had a long talk with me and convinced me I had to pay or I was gonna get thrown in jail. And if that aint enough I also gotta pay $200 a month in child support! Hell, that little brat aint even mine and she knows it! I knows his father is Greg Halfenbeckerhornstead. I know they were making out and doing other stuff Jesus wouldn't like! That's why I left her!

Hell, got myself all riled up. Sorry.

Anyway, I get paid on Friday and I'll send you the money then. Well, maybe you better wait until Saturday. I tend to hit the bars on Friday and this Friday being a payday and all I'll probably be having a real good time, if you know what I mean. I probly wont be able to get out of bed until noon or later Saturday morning. I like me those cosmopolitans! But I promise I'll go the western union as soon as I get up! I should still have money then. I've never drank $600 of liquor before. God knows, I've tried though. And there's always a chance I'll get some big bills stuffed in my g-string. On Friday nights, the ladies really come out. I've found the plump ones are the best tippers. Do you like large women? I sure do! The bigger the cushion, the better the pushing as Spinal Tap says. You have Spinal Tap over there in Nigeria? I reckon you do. It's rock n roll! Woo!

Man, I cant wait to get that electric g-string. That'll bring in the big bucks! Yessir.. When I got your email, I just knew my life was changing for the better! In fact, tell you what I'm gonna do! Not only will I repay you that $400 you owe me, but I will also throw in an extra $20. You can buy the Spinal Tap cd with that! Hell, I think I'll just go make you a tape right now. Forget about the extra $20. But don't worry..I'll use a high quality TDK cassette so you can hear the Tap in all their glory! And not those crappy 120 minute ones either. And if there's room, I'll add on some of my own songs. I write songs you know. Gotta have something to fall back on. My body aint gonna be this hot forever (especially if I keep partying hard on Friday nights.. I don't know how Ron Wood manages to still look so good.)

Yours in christ,

Jethro

From: UBA Group allengodwill@group.com
Date: Thu, 02 Jun 2011 07:32:37 +1000
Subject: PAYMENT INSTRUCTION.
Reply-To: ubagroup_godwill@9.cn

UNITED BANK OF AFRICA [U.B.A]
Registered office:
261 Tower Building Estate,
Gariki,Abuja,23452.
SWIFT: DABAGB2B
Switching to UNITED BANK OF AFRICA [U.B.A]

Attention : Jethro Beauregard,

Below is our account officer details that you are to use to make the
payment for the insurance cover.

USE THE BELOW FOR PAYMENT VIA Western-Union-Money-Transfer.

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Receivers Full Names: GEORGE RAYMOND.
Receivers Address: 324 M . M Way, Benin City Edo State Nigeria. 23452.
Amount To Be Sent: $600.00 USD
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
When You have made the above payment as instructed Via
Western-Union-Money-Transfer, send back to us the below required details of
payment, for confirmation.
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Sender's First Name:...................................
Sender's Last Names:...................................
Country/city/state/zipcode of where money is sent
from:.....................................................
Sender's Address:...................................
Sender phone No:....................................
MTCN [Money Transfer Code Number]....................... .......
Amount Sent:..........................................
Text Question : ...........................
Text Answer :..........................
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

Once the payment is made, you are to FAX A COPY OF THE PAYMENT SLIP FROM
WESTERN UNION TO Fax: + 1-309-214-6065 and we will receive it. and also
fill the above required details of payment via email to enable the us
confirm the payment and start processing your Delivery with immediate
effect.

We are glad to be of service to you.

We anticipate your immediate action on this matter of world interest.

Mr. Allen O'Godwill
Transfer Department,

Inspector Abdural Rowe,

CC: The Presidency
CC: Federal Ministry of Finance
CC: Federal Ministry of Justice

Tel: :+234-708-977-9324
Email: ubagroup_godwill@9.cn

From: UBA Group allengodwill@group.com
Date: Thu, 02 Jun 2011 14:22:00 +1000
Subject: Attention:Jethro Beauregard,
Reply-To: ubagroup_godwill@9.cn

Attention:Jethro Beauregard,

Your mail was recieved i will like to have your personal phone number.
the 400.00 USD promise by me to loan out to you will be sent to the Account officer MR.goege ramond
first thing on friday morning. And you will have to send the the complete balance to him once i get contact
by him about the balance, Your transfer will be to you imediately

please do not fail to send to me back my $400.00 USD.

I WILL LIKE YOU TO CALL ME TODAY SO I WILL BE REST ASSURE.

My contact details is as follow;
Phone;+234-708-9779-324
Mr. Allen Godwill

From: xxxxxxxxxxxxxxxxxxxxx
To: ubagroup_godwill@9.cn
Subject: RE: Attention:Jethro Beauregard,
Date: Thu, 2 Jun 2011 08:38:03 -0700

Mr. Goodwrench,

I told my good friend about this wonderful event that has come my way. He warned me that this might be some sort of scam. I'm not sure I believe him, but it did get me to thinking. I don't know much about you and I'm not sure I feel too good about sending $600 to someone I don't know very well. Can you tell me a little bit more about yourself? You haven't answered any of my previous questions - do you like large women? Do they have Spinal Tap in Nigeria? Tell me about your family. Can you send a picture of yourself? I can send you one of me if you would like. Face only please! Lordy, I once asked someone for their picture in email and they sent me back one of them completely nekkid! Can you believe that? I tell you, the internets are full of strange people!

Anyway, I figure you might want to get to know me better too, so I'll tell you a bit about myself. I graduated from high school 25 years ago. I spent some time taking classes at the local community college. I was going to be a microwave repairman. But then one day I turned on something I shouldn't have and felt my spleen getting warm. Turned out, I was shooting microwaves at myself! I decided then and there that I wasn't going to be a microwave repairman no more.. That incident made me realize how close I had come to nuking my man sack and I aint had any kids yet, so I didn't want that to happen. So I had a friend who was a dancer and he told me about all the money he got from just dancing for women. It sounded like a pretty easy job to me, so I took a correspondence course on how to become a male dancer. Now I don't do all the hoochy-coochie moves they taught me, but I do enough to make the ladies take notice, if you know what I mean. I've been doing this for 15 years now. I don't make a bunch of money, but I make enough to keep my liquor cabinet full.

I have a couple of pets. I got 3 turtles 1 monkey and 1 cat. I had a bird too, but it flew away, as birds are wont to do. Anyway, the monkey likes to play drums on the turtles shells. It's so funny! Like a scene from the Flintstones. You know what the Flintstones are, right? Sometimes the monkey flings his poop around the mobile home, but I'm working on teaching him to use the can (that's American for "toilet").

Well, like i said before, I don't get paid until Friday (tomorrow). Hey, I bet it's Friday where you are! Or is it still Thursday? That whole international date line thing messes up my head. So you might be emailing me from the future! Wow.. that's something to think about. Makes my head throb.

I tried calling you. That's a lot of digits for a phone number. My phone cant handle all those numbers. It's one of those pre-paid phones - a Cockroach or something. Pillbug. Cricket! That's it. Cricket! Anyway, I wont have any money until tomorrow, so I'll email you again then.

Yours truely,

Jethro

From: UBA Group allengodwill@group.com
Date: Fri, 03 Jun 2011 07:42:43 +1000
Subject: Dear; Jethro Beauregard,
Reply-To: ubagroup_godwill@9.cn

Dear; Jethro Beauregard,

Your mail was recieved, And it is well noted. i will lke to inform you that i get paid today and i have sent the $400.00 USD to MR.Gorge Raymond
this afternoon. you are to complete the balance and send it to him so we can commense on the transfer once it is comfirm.

NOTE; That the FUNDS will be fully completed first thing on saturday once he comfirm the balance that is to be sent to him
first thing tomorrow by you.

NOTE; That you have nothing to be afrade of, This bank those not condue any fraudulent activity.

Regarding your consince about my personal information is a good thing to be ask of mine information. My position in this bank
can not allow souch, For enquiering feel free to call me if you have any consine as am here to help you get this FUNDS.

And I have put all security in place to help monitor the transfer.

My family and i are fine i have two kids and a wife leaving together my wife work as norse in a private hospital here i NIGERIA

PLEASE once you send the $600.00 USD tomorrow call me to inform me and fax the PAYMENT SLIP to my office for verification. and do not
forget to send back to me the $400.00 USD loan out to you.

once again my regards to your family too.

MR.Allen O Godwill
Phone;+234-708-9779-324

From: xxxxxxxxxxxxxxxx
To: ubagroup_godwill@9.cn
Subject: RE: Dear; Jethro Beauregard,
Date: Thu, 2 Jun 2011 17:20:30 -0700

I'm glad you wrote back so quickly! I'm working on your Spinal Tap mix tape. You never did tell me if you heard of the Tap. Well, you're about to get a full 90 minutes of their hot rockin' licks! Side A is just about done being recorded, so I can't spend long writing this. I'm gonna have some room left over on the tape and I thought I'd put on a song or two of my work. Would you rather hear me sing the Macarena or More Than A Feeling? Hurry and let me know! It's almost time to record!

Jethro

P.S. I'm going to label your tape "The Tap Tape" Aint that a great name! Because Tap and Tape sound alike. They look alike too. You might not get that because american probably isn't your native language, but trust me.. It's great!

From: UBA Group allengodwill@group.com
Date: Sat, 04 Jun 2011 07:18:28 +1000
Subject: Act urgently.
Reply-To: ubagroup_godwill@9.cn

Dear

Good day, i have sent the 400.00 USD to Mr.Gorge Raymond, the account officer yesterday and please it is already Friday in your country now. and you should try and send the balance 600.00 USD to him so we can complete the transfer to you, and once you have sent the money to him through western union you should inform me and FAX a copy of the PAYMENT SLIP to my office for verification.

PLEASE my 400.00 USD I loan out to you, try and send it to me after you have received your FUNDS.,

I want to thank you for the tape you promise to send me i am very glad thanks.

PLEASE the contact number you give to us is not connecting try and send a valid number to us so we can contact on telephone for folder information.

THANKS FOR YOUR UNDERSTANDING.

MR.Allen O. Godwill

From: UBA Group allengodwill@group.com
Date: Sun, 05 Jun 2011 06:52:40 +1000
Subject: Attention:Jethro Beauregard,
Reply-To: ubagroup_godwill@9.cn

Attention:Jethro Beauregard,

Good day now are you doing to day, hope all is well. I was contacted to by MR.Gorge Raymond, regarding the balance payment for the insurance cover and he told me that he has not received any payment from you as you promise pleas get to me with the details of the payment of the $600.00 USD that you are to send to him so we can proceed with the transfer.

please act fast and know that the $400.00 USD I loan out to you is very important and i do not want any thing to go wrong with this transfer as delay is very RISK.

THANKS FOR YOUR UNDERSTANDING.

MY BEST REGARDS.

MR.Allen .O.Godwill

From: xxxxxxxxxxxx
To: ubagroup_godwill@9.cn
Subject: RE: Attention:Jethro Beauregard,
Date: Sat, 4 Jun 2011 14:33:02 -0700

What day is it? Is it Saturday? Man, I've got one hell of a hangover.. Can't remember what happened yesterday at all! Must have been good though.. I woke up with about 15 of those little drink umbrellas stuck in my hair. And I'm afraid I have some bad news for you Al. Can I call you Al? You can call me Betty. You can be my bodyguard and I can be your long lost pal. Seems I spent quite a bit of money on booze last night. Hard to tell exactly, except my billfold is pretty empty. I've only got about $317. Can you lend me another $200? I can probably sell my turtles and get another $100. Do you think I should sell my turtles? Don't even think about telling me to sell my monkey. That's not gonna happen. Ask my ex-wife.

Speaking of my ex-wife, you sure are starting to sound like her.. All you ever talk about is money money money. Just like her. "Where's my money?" Blah blah blah. Just like my landlord. Just like those people at the credit card company that keep calling me. I'm starting to think you are only interested in my money. You better change that. I need to feel like you're my friend before I go sending money to you. Tell me about yourself. What are the names of your kids? (My pets are named Blinky, Pinky, Inky, and Clyde (that's the monkey).) How tall are you? What color are your eyes? How many teeth do you have? What is your favorite color? I need to know these things to feel comfortable doing business with you.

Jethro

From: Allen Godwill ubagroup_godwill@9.cn
To: xxxxxxxxxx
Subject: RE: Attention:Jethro Beauregard,
Date: Sat, 4 Jun 2011 19:35:08 -0500

Attention

Good day to you, I am very not happy to hear you speak let this you are not business concourse

i do not know how to help in this case i have spent almost my salary i told you that i have family responsibility to take care of i do not know how to help really i have no money left what you have to do not to have delay on the transfer you can send the 300.00 USD to MR.Gorge Raymond the account officer to day once it is Sunday i try to see one of my friend to see if he can lend me some money to complete it because we are delay in paying up this insurance feel.

please you have to send a valid telephone number to immediately so i can call you personally.

THANK FOR UNDERSTANDING

MR.Allen O Godwill.

From: xxxxxxxxxxxx
To: ubagroup_godwill@9.cn
Subject: RE: Attention:Jethro Beauregard,
Date: Sat, 4 Jun 2011 22:06:32 -0700

And I am not very happy with the way you are treating me. Now you listen here Al - I've got my $317 all sealed up in an envelope ready to take down to the Western Union office, but you aint done a single thing I ask you to do yet. This is a very lopsided relationship and I won't stand for it! Now if you want me to send you that $317, you need to answer the questions I asked you last time. To repeat:

1. What are the names of your kids?
2. How tall are you?
3. What color are your eyes?
4. How many teeth do you have?
5. What is your favorite color?

Jethro

From: Allen Godwill ubagroup_godwill@9.cn
To: xxxxxxxxxxxxxx
Subject: ACT AS INSTRUCTED.
Date: Sun, 5 Jun 2011 12:14:35 -0500

Attention:Jethro Beauregard.

Good day to you,Your mail was recieved and it is well noted regarding the transfer of your FUND, you should try and send the
$300.00 USD that you have to MR.Gorge Raymond to day so we can fanalise the transfer.

Below is my personal profile.

1)NAMES OF CHILDREN: David and Keller
2)hight; 6ft and 5inch
3)COLOR OF EYES:White
4)NUMBERS OF TEETH: 32
5)FAVORITE COLOR:Blue

NOTE; You are to make the PAYMENT latest to day and get back to us with the Details and fax a copy PAYMENT SLIP.

BEST REGARDS.

MR.Allen O Godwill

From: xxxxxxxxxxxx
To: ubagroup_godwill@9.cn
Subject: RE: ACT AS INSTRUCTED.
Date: Sun, 5 Jun 2011 15:18:50 -0700

Why thank you! It's about time! I feel like we are friends now! White sure is a strange eye color. I was talking about the colored circle part in the middle of your eye, not the other part. Mine are white there too - well, red now on account of all the liquor I've been drinking, but the colored circle part of my eye color is brown. What color is yours?

I went down to the Western Union office today, but they are closed on Sunday. I was walking back to my mobile home and a great idea occurred to me! I thought of a way to get the full $1000 for your! That way you can get your money back! So I stopped at the local liquor store and bought $417 worth of lottery tickets! Was that a great plan or what! The drawing is tonight and with all those lottery tickets, I'm sure I'll be a big winner! I should also tell you that I sold my turtles for $100. I was sad to see them go, but I felt real bad about spending all that money on booze when I had promised it to you. But at least I still have my monkey. So don't worry.. Tomorrow, when the Western Union office opens, I'll take my lottery winnings and send you $1000!

Jethro

P.S. Did you get the Tap Tape yet? I forgot to ask if you have cassette players in Nigeria. I hope you do!

From: Allen Godwill ubagroup_godwill@9.cn
To: xxxxxxxxxxxx
Subject: Payment Instruction.
Date: Sun, 5 Jun 2011 23:30:38 -0500

Dear Jethro Beauregard.

Your mail was received, I very sorry about the news that you have to sale your turtles for $100.

I am not too have about that sorry.

please once you made the payment Mr.Gorge Raymond you send to our office the require details of payment from the western union.

NOTE.;Tomorrow is first working day once we received the details for and it is completed your FUND will transfer to you as it take 24 hour to reflect in your BANK ACCOUNT.

BELOW IS THE INFORMATION YOU NEED TO MAKE PAYMENT VIA WESTERN UNION.

=============================================================
UNITED BANK OF AFRICA[U.B.A]
Registered office: 261 Tower Building Estate,Gariki,Abuja,23452.
SWIFT: DABAGB2B
Switching to UNITED BANK OF AFRICA [U.B.A]

Attention :

Below is our account officer details that you are to use to make the payment for the insurance cover.

Note that immediately we receive your payment for the insurance cover we will immediately effect the transfer the funds into your account.

GOTO Western-Union-Money-Transfer, AND USE THE BELOW FOR PAYMENT VIA Western-Union-Money-Transfer.

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Receivers Full Names: George Raymond.

Receivers Address: 663 Grace Dr, Benin, Edo, Nigeria. 23452.

Amount To Be Sent: $300.00 USD

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When You have made the above payment as instruted Via Western-Union-Money-Transfer, send back to us the below required details of payment, for confirmation.

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Sender's First Name:...................................

Sender's Last Names:...................................

Country/city/state/zipcode of where money is sentfrom:.....................................................

Sender's Address:...................................

Sender phone No:....................................

MTCN [Money Transfer Code Number].............................

Amount Sent:..........................................

Text Question : ...........................

Text Answer :..........................

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Once the payment is made, you are to FAX A COPY OF THE PAYMENT SLIP FROM WESTERN UNION TO Fax: + 1-309-214-6065 and we will receive it. and also fill the above required details of payment via email to enable the us confirm the payment and start processing your transfer with immediate effect.

We are glad to be of service to you
.We anticipate your immediate action on this matter of world interest.

Mr. Allen O'Godwill

Transfer Department,
Inspector Abdural Rowe,

CC: The Presidency
CC: Federal Ministry of Finance
CC: Federal Ministry of Justice
Tel: :+234-708-977-9324

From: xxxxxxxxxxxxxxxxx
To: ubagroup_godwill@9.cn
Subject: RE: Payment Instruction.
Date: Mon, 6 Jun 2011 12:35:33 -0700

Oh Al, I have some terrible, terrible news! You know all those lottery tickets I bought? I didn’t win! Well, I won $5 on one, but I used that to buy a Snickers bar and a Slim Jim because I don’t have any more money now and I was hungry something fierce. I can’t believe I didn’t win thousands of dollars! My mama always said the only luck I have is bad luck and I guess she was right. So now I’m flat broke. I have no money and my rent is due and I need to buy some Monkey Chow for Clyde and some food for me. And I lost my job as a dancer yesterday! I tried to make some extra money by offering my "services" to a lady, but she ratted me out to the man and he fired me on the spot. Have you ever had to walk home in buttless chaps after midnight? It was very cold.

I had nowhere else to turn, so I called my ex-wife and begged her to lend me some money. I told her what I had done and all about our emails. She called me twelve kinds of a fool and wouldn’t lend me any money. She also sent her lawyer over and he made copies of all our emails. He doesn’t think you are telling the truth. But you told me the names of your kids and how many teeth you have! How could you be lying to me?? Al, I hate to say it, but I think you might be the cause of all my problems. Ever since I got your email, I’ve had nothing but money problems. And you made me sell my turtles, so I can’t even talk to them about it. They were like brothers to me! And now they’re gone! Gone! Whenever I walk by their empty plastic pool, I’m overwhelmed with guilt. I sold them out! What kind of brother am I?? My life feels so empty and hollow. I rue the day I read your first email! Let this be a lesson to you – the love of money will ruin your life! Repent now! Save yourself and your wife and kids from a life of despair and heartbreak!

Jethro

I've had no response to that email and probably won't. The guy finally realized he won't be getting any money out of me.

Rolling Along

2011-05-31T15:21:00.000-07:00

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 is needed and that's about it. No idea on the inside. Current value is estimated to be $180,000 and after rehab, about $195,000. So our LTV based on the after rehab value is 53%. Using the current value, it's 58%.

What makes this a good deal for the buyer is that it appears some websites might have led people astray. ForeclosureRadar.com, which is a site used by many of the people who buy at these auctions, lists the property as 1,649 square feet. In fact, our borrower was the only one who bid on it at the auction, probably for this reason. But a visit to the property shows it looks bigger. In fact, it turns out the property is about 2,049 square feet - a room was added on above the garage. And the work was done with the proper permits and the larger square footage is reflected in the tax records for the property.

The borrower is a first time customer for us, but he is a licensed Realtor and often buys properties for our biggest borrower, so he knows his stuff. He is also personally guaranteeing the loan. Looks like he did his homework and found a good deal. This is a good example of why I like to use official records when checking out properties.

In other news, the April financials for the Houston apartment complex are in.Occupancy remained stable at 93% and total income was up about $1,000 over March, mainly due to increased collection of late fees. We had another month of positive cash flow - about $4,300. The year to date positive cash flow is about $21,000. Mangement is cautiously optimistic that we will have a strong second half of the year. Some maintenance of the exterior wood will be starting in June, but it shouldn't affect cash flows as it will be paid for from the replacement reserve account that is in escrow with our lender.

Loan Closed And A Possible New Investment

2011-05-18T12:51:00.002-07:00

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 next deal.

The first payment on loan #17 was mailed out today. As usual, this borrower paid early.

I also spoke today with someone over at Rising Sun Capital Group. I came across an article one of the principles wrote on the Bigger Pockets blog. RSG is a company that flips properties locally here in the Phoenix area and I'm thinking about investing some money with them. This is more risky than my hard money lending. If I invested with them, I would be actually owning property and thus taking on the risks that entails. I would be counting on their expertise in evaluating deals and choosing good ones, as well as their rehabbing and resale experience. In my phone conversation, I did find out that they have lost money on some deals in the past. (In comparison, my partner has been a hard money lender since the 90's and has not lost a penny of his or his partner's principle.) Of course, the potential returns are higher too. All my funds are currently tied up in loan rights now, so I have some time to think about this more. (The funds from hml #13 belong to my IRA and are not enough to meet Rising Sun's minimum investment.) When the Houston apartment sells and I get that money back, I may go this route. That likely won't be for at least a year.

I do find it funny that the guy I spoke too wrote an article about wanting to become a hard money lender and here I am, a hard money lender, looking to get into his business. I guess the grass is always greener on the other side!

Bankruptcy Law Allows Home Owners To Dump Second Mortgages

2011-05-09T12:47:00.001-07:00

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 have any equity in it to cover the loan. Thus, it is eligible for elimination through bankruptcy proceedings. Once bankruptcy has been declared and the repayment plan completed (which takes about three to five years - during which payments on the second are suspended), the second mortgage is wiped out.

The understatement of the year award goes to this line in the article: "Mortgage bankers don't like the practice."

Hard Money #13 Closing After All

2011-05-06T12:34:00.003-07:00

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 days.