Triple Deal in Flint

This one is a pool of three notes in Flint Michigan.

Note purchase: $41,000

Date of Note Purchase: 23 Feb 2017

Estimated Operational Costs: $17,649

JV Investments: $58,649 

JV Funding Date: 06 March 2017

When we had initially reviewed these assets, we expected to conduct rehab on two of them. The first thing we do is look at the payment history and the call logs and develop an idea on who will and who will not perform again. Turns out we were kind of right and kind of wrong. After just six months, we have returned $30,000 to our JV and we still have two assets that will be generating income in the near future.

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Note: $19,000 

Estimated Operational Costs: $2,733

Sale Date: 09 August 2017 

Closing of Books: Still Open 

Check at Closing: $39,531.90

Actual Workout Costs: $1,315.16 YTD (We still have a couple of expenses to hit the books)

JV Profit after costs: $9,500+ (Still waiting on the final expenses.)

Return: 44%+

The first property was in Linden Michigan which is south of Flint and has some better property values. This borrower was making payments, but just wasn't caught up. We approached him and offered to put him on a temporary payment plan and forgive his arrears and call him current. For whatever reason, he didn't like that and went to a credit union and applied for a loan to refinance the house. He was approved and two months later we were paid off.

Note: $9,500 

Estimated Operational Costs: $7,529

Closing of Books: Still Open 

Actual Operational Costs: $3,248.91 YTD 

Profit after costs: TBD

Monthly Payment: $437.88

Annualized ROI after a year of payments: 15% for JV

In the same pool we have this property on the east side of Flint, which we anticipated we would turn into a rental because of the poor payment history of the borrower. The low end of rents are looking like $700/month. At this price, we'll be making some decent money as a cash flow asset. We offered cash for keys and then took this to court. This is when the borrower exercised their right to declare bankruptcy. While it wasn't part of the plan, it's OK because now we will have court mandated payments for the loan, plus a little more for arrears. Should the payments stop, we'll strip the property from the bankruptcy and proceed with our legal path. Currently we are looking at close to $438/month in payments, but we are working on a little more to cover the taxes and have them provide insurance. Once the payments come in, the ROI will be close to 15% annualized for the JV partner, with full equity in the unpaid balance off the loan for the next 30 years, unless we decide to sell the note.

Note: $12,500 

Estimated Operational Costs: $7,387

Actual Operational Costs: $3,362.37 YTD

Estimate Rents: $650/month

Profit after costs: TBD

Returns for JV: 0% YTD

Finally we get to this property which is a little to the west of downtown Flint. It's a nice area that is picking up in values. We didn't pay much, but we had to deal with the legal. The borrower would never communicate with us. We always offer cash for keys, or a chance to pay on their loan. However, that did not happen here, so we went the legal route. In the middle of July, we received our judgement in our favor and the house is ours. In Michigan, the borrower still has 90 days for redemption, which means they get another 90 days to stay in the property. We have made contact with them and have offered a small amount of cash to move out earlier and they are currently considering it. Once they vacate, we will start the rehab on this property and hopefully have it rented by the end of the year. The anticipated ROI once we turn this into a rental is around 10% for our JV, plus we'll have full equity in the value of the property.

Stay tuned for updates.