calmloki
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Yesterday we funded another property loan - a 4 plex built in 1970. Tax man says it's True Cash Value is $288k, which is pretty optomistic IMO. Still, 4 840' 2Br/1ba units should easily rent for $550+ each, so $220k looks like an easy value. $64.60/sq.ft.. Borrower is putting up $38k, we are loaning $130k, a lawyer is taking a $22k second position, and the seller is carrying back a $27k third position. Total sale price with closing costs folded in: $217k. We pulled money we had sitting in a Capitol One Costco savings account to fund the loan - it was earning about 3.5%. For grins we asked for a 0.5% up front loan fee and 11% with a 5 year balloon payment and a one year minimum with a 3% prepayment penalty.
Result is that we are looking at maybe 7.5% better interest than CapOne after figuring in the inevitable non-earning transmission days and niggling fees. Another way of looking at it is that we stand to make about $812/month more than the savings account was paying - which is almost the $815 we were charging for the rental house in Monmouth we are trying to sell!
On the down side, as the fed prints dollars the real value of our loan will diminish, and we don't have that cash in the bank to invest or otherwise use, plus there is the risk of having to foreclose. Talked with another local landlord while at the bank yesterday and he was saying that he's bought 2 houses in the last week - cheap! Good for him, but i hope to move out of rentals - loaning money so others can buy cheap is kinda easy compared to fixing frozen pipes and squeezing rent a bit at a time.
Result is that we are looking at maybe 7.5% better interest than CapOne after figuring in the inevitable non-earning transmission days and niggling fees. Another way of looking at it is that we stand to make about $812/month more than the savings account was paying - which is almost the $815 we were charging for the rental house in Monmouth we are trying to sell!
On the down side, as the fed prints dollars the real value of our loan will diminish, and we don't have that cash in the bank to invest or otherwise use, plus there is the risk of having to foreclose. Talked with another local landlord while at the bank yesterday and he was saying that he's bought 2 houses in the last week - cheap! Good for him, but i hope to move out of rentals - loaning money so others can buy cheap is kinda easy compared to fixing frozen pipes and squeezing rent a bit at a time.