Monday, August 11, 2008

Another Hard Money Investment Made

This weekend, I got another opportunity for a hard money lending opportunity from my partner in some other deals, Les. A contractor has purchased a duplex all cash for $355,000 in Livermore, California, which is a bit south of the San Fransisco Bay area. He's coming to us for a first mortgage of $285,000, giving an 80% loan to value ratio. The property was a bank REO, but it is in fairly good shape. ROI is 10% net to me. Interest only payments and the loan length is 1 year. He's personally guaranteed the loan and we can hit his excellent credit score if he is 30 days or more late with a payment.

The property is a duplex on a 7,000 square foot lot. Units are 1,050 square feet (2 bed / 2 bath) and 945 square feet (2 bed / 1 bath). There are 4 parking spaces. Conservative estimate for monthly rental income is $2,800. Borrower, who has better knowledge of the area, believes it can rent for $3,400. If the borrower does not perform and we have to foreclose, the exit plan is to keep the property and rent it out for its cashflow.

I've decided to invest in this. I'll label it Hard Money #5.

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