Closed on Walnut yesterday, started doing the drywall (Myself) on the property. Tired of sitting in a office most of the day and figured I could get some done while the rest of the crew finishes up Mill. Managed to get the 1st step of the drywall done.
Lots of plumbing leaks in the basement, I think it might be advantageous to re-plumb with CPVC , everything right now is galvanized which is literally the devil. CPVC is extraordinarily cheap and lasts forever.
Topic: RentalStarter - A Midwest Real Estate Investment Company - page 24. (Read 120408 times)
Not entirely organic growth, taking on debt is fine.
I agree, debt is a great way to increase your company value. If my courses in Corporate Finance taught me anything it was that you should always have some debt, so you can increase your value! Loving the updates Branny, it's looking really good, and the recent uptick in prices was long awaited/well deserved. Shouldnt be more than a few months before we hit 0.01 I think. The company is still worth more than the market cap!
I think as long as we continue to grow, provide value and have solid cashflow we could see a true company value of 2x or 3x of our NAV which would benefit shareholders even more. I've spent some time looking at other similar projects that have underwent various equity financing rounds and they usually funded at $3m-$4m and only expected around a 8% ROI when it was all said and done. Right now we expect an average 16.4% ROI based solely on the income of the properties, equity is another 3.5% to 5% YEARLY, with another one-off equity increase of 30% per property due to us buying distressed properties then fixing them up.
As another note, the tenants of W. Mill really do like it and are considering purchasing, if we did that route, we'd have a one-off profit of over $50k.
Not entirely organic growth, taking on debt is fine. Running a business that survives by continually taking out new debt is unappealing to me.
Keep up the good numbers
Keep up the good numbers
Branny, what are you doing incase the SEC comes knocking? From what I understand, you'll be in a bit of trouble, no?
At some point in the future we'll be able to release our business structure/investment documents which will provide some transparency on the SEC issue, but at this time I haven't been able to get the full documentation yet (available for release).
I really wouldn't have much interest in starting a company that the SEC could shut down at a whim, so since day 1 we've been making sure that we do our best with what is available for compliance. It also bodes well for us that investment goes from havelock>hk investment company>US company.
Branny, what are you doing incase the SEC comes knocking? From what I understand, you'll be in a bit of trouble, no?
^^Agreed, is currently undervalued
While taking on some debt is perfectly fine, building the business entirely through debt is not good practice. To keep purchasing via leverage may expand quickly, but what if there is a dry spout and you can't get occupants for some properties? How will the (massive, interest will add up quickly) monthly payments?
Just keep going with organic growth, your business is expanding nicely as is.
My .02BTC
While taking on some debt is perfectly fine, building the business entirely through debt is not good practice. To keep purchasing via leverage may expand quickly, but what if there is a dry spout and you can't get occupants for some properties? How will the (massive, interest will add up quickly) monthly payments?
Just keep going with organic growth, your business is expanding nicely as is.
My .02BTC
Organic growth in our case means we stop growing, period. It's far better for us to leverage (Not to the brim though).
At 70% LTV , 6%-7% and using our method of savings/investing, there would have to be a massive US real estate failure for us to stop making payments. Additionally we're aiming for a $20k+ rolling savings reserve which help us through dry times.
Branny, when do you see getting leverage/loan? A year from now? Less or More? Just curious in the planning on that...
I've been talking to a local lender about a 70% LTV @ 6%-7% interest, they are quite positive on it.
I believe if I can show 2-3 months at 100% occupancy (After renting properties out) we'll be able to get it. This would put us at 4-6mo from now. If we get levered, then we'd have another $300k+ to work with.
Leverage WILL decrease the dividend amount, however IMO it is quite worth it. All together we will have less than $350k spent for monthly net income of a little shy of $60k/yr and $200k+ in extra equity.
Loan costs on $300k will be around $3k a month, of which $1.75k goes to interest, the rest is principal reduction. This of course would half the effective dividend, but we'd be able to roughly double our portfolio size, which then would result in another approximate $5,000 of effective income pre-leverage which we then can redo over and over again.
Additionally , our estimated equity/year gain is $20k-$28k/yr right now. This essentially offsets the loan interest when we leverage our purchases.
I think that's a very sound plan. Some leverage is definitely necessary if we want to grow. However, isn't a 6-7% interest a bit steep for a loan of this type? Just asking, I thought financing costs in the US were lower than that.
In any case, if we look at the current NAV of $555000 and add to it 100BTC=$44000 it adds up to about 600k. Compare this to the current market cap of ฿924.3757 (~$437691.89) and you will see why the stock is a very good value at this point.
6%-7% is a bit high, but not uncommon. The loan is going to our LLC which means there's very little personal liability for myself (Even though i'm a grantor) or potential shareholders. It's much easier to walk away from a LLC loan, so you end up paying for the higher bank to the risk via additional interest. Commercial loans typically are 1%-2% over traditional house loans.
It's a $300,000 loan on a fixed 7%. That's like a normal home mortgage in the States. (Though interest rates are about half that these days.) Can use the existing mortgage payments to pay the loan, you buy new properties with the additional money to grow equity. Then use those payments to leverage again. In the meantime you flip some houses and what-not for additional revenue. Plus, housing values should rise which will gain more profit vs just collecting rent payments.
There is risk of another total housing market meltdown, but so long as the initial properties can handle the loan payments with a buffer for a risky tenant or two, you have no issues. A total worst case scenario is you liquidate properties to pay the loan off.
I say you leverage, when you need you to.
There is risk of another total housing market meltdown, but so long as the initial properties can handle the loan payments with a buffer for a risky tenant or two, you have no issues. A total worst case scenario is you liquidate properties to pay the loan off.
I say you leverage, when you need you to.
^^Agreed, is currently undervalued
While taking on some debt is perfectly fine, building the business entirely through debt is not good practice. To keep purchasing via leverage may expand quickly, but what if there is a dry spout and you can't get occupants for some properties? How will the (massive, interest will add up quickly) monthly payments?
Just keep going with organic growth, your business is expanding nicely as is.
My .02BTC
While taking on some debt is perfectly fine, building the business entirely through debt is not good practice. To keep purchasing via leverage may expand quickly, but what if there is a dry spout and you can't get occupants for some properties? How will the (massive, interest will add up quickly) monthly payments?
Just keep going with organic growth, your business is expanding nicely as is.
My .02BTC
Branny, when do you see getting leverage/loan? A year from now? Less or More? Just curious in the planning on that...
I've been talking to a local lender about a 70% LTV @ 6%-7% interest, they are quite positive on it.
I believe if I can show 2-3 months at 100% occupancy (After renting properties out) we'll be able to get it. This would put us at 4-6mo from now. If we get levered, then we'd have another $300k+ to work with.
Leverage WILL decrease the dividend amount, however IMO it is quite worth it. All together we will have less than $350k spent for monthly net income of a little shy of $60k/yr and $200k+ in extra equity.
Loan costs on $300k will be around $3k a month, of which $1.75k goes to interest, the rest is principal reduction. This of course would half the effective dividend, but we'd be able to roughly double our portfolio size, which then would result in another approximate $5,000 of effective income pre-leverage which we then can redo over and over again.
Additionally , our estimated equity/year gain is $20k-$28k/yr right now. This essentially offsets the loan interest when we leverage our purchases.
I think that's a very sound plan. Some leverage is definitely necessary if we want to grow. However, isn't a 6-7% interest a bit steep for a loan of this type? Just asking, I thought financing costs in the US were lower than that.
In any case, if we look at the current NAV of $555000 and add to it 100BTC=$44000 it adds up to about 600k. Compare this to the current market cap of ฿924.3757 (~$437691.89) and you will see why the stock is a very good value at this point.
Branny, when do you see getting leverage/loan? A year from now? Less or More? Just curious in the planning on that...
I've been talking to a local lender about a 70% LTV @ 6%-7% interest, they are quite positive on it.
I believe if I can show 2-3 months at 100% occupancy (After renting properties out) we'll be able to get it. This would put us at 4-6mo from now. If we get levered, then we'd have another $300k+ to work with.
Leverage WILL decrease the dividend amount, however IMO it is quite worth it. All together we will have less than $350k spent for monthly net income of a little shy of $60k/yr and $200k+ in extra equity.
Loan costs on $300k will be around $3k a month, of which $1.75k goes to interest, the rest is principal reduction. This of course would half the effective dividend, but we'd be able to roughly double our portfolio size, which then would result in another approximate $5,000 of effective income pre-leverage which we then can redo over and over again.
Additionally , our estimated equity/year gain is $20k-$28k/yr right now. This essentially offsets the loan interest when we leverage our purchases.
Branny, when do you see getting leverage/loan? A year from now? Less or More? Just curious in the planning on that...
Great job Branny!
Maybe we'll make it back to the price you were at 1 year ago(?) in a few years time.
Maybe we'll make it back to the price you were at 1 year ago(?) in a few years time.
Dividend distribution & financial performance for April 15th-May 10th.
Here are the totals from our properties.
W. Mill - $700
Logan - $800 (Two months of rent, tenants paid up)
Scioto/Union - $900
Scioto - $900 (There is a slight delay in payment to us from MHA because of some really stupid section 8 rules, we will pay out on it anyways).
$3,300 net income for May * 46% (All properties are at 46% currently) = $1518.00
E. Mill is almost done in terms of rehab, we expect $500+ in income (net) from the property.
Mulberry is still waiting rehab, significantly less work than E. Mill so it should be quick (Expecting $900 net income from this one)
Walnut closes supposedly on the 15th, very short rehab time estimated as well, $550-$600 in net monthly income expected from this property.
$437/BTC price currently / $1518 = 3.474btc dividend payout
151,537 shares / 3.474btc = 0.00002293 payout, a 39% increase from last payout.
3.474btc * 12 / 940btc (Current RENT mkt cap) = 4.4% APY
We expect another $2,000 of net income once the other properties are rented which would increase our div yield by about 60%. This includes no extra income from flipping, rent-to-own deals or other income which is what we are working towards.
Total portfolio value (once 100% occupancy & rehab) is estimated to breakdown this way :
W. Union - $115,000
Logan - $60,000 (A increase from $55,000 on last reports due to good market increases)
Scioto/Union - $85,000 (Based on a very recent, very close sale @ 20% simple ROI)
E. Mill - $80,000 (Revalued due to recent comps)
Mulberry - $75,000
Scioto - $65,000
Walnut - $75,000
Total NAV = $555,000 or 1,270btc based on current values or .0083btc/share. This does not account for cash or BTC in the bank but only assets.
Additionally we still expect a little over 100btc in the bank after all repairs are expected to be completed. This can be used on an additional property purchase should we so choose.
Here are the totals from our properties.
W. Mill - $700
Logan - $800 (Two months of rent, tenants paid up)
Scioto/Union - $900
Scioto - $900 (There is a slight delay in payment to us from MHA because of some really stupid section 8 rules, we will pay out on it anyways).
$3,300 net income for May * 46% (All properties are at 46% currently) = $1518.00
E. Mill is almost done in terms of rehab, we expect $500+ in income (net) from the property.
Mulberry is still waiting rehab, significantly less work than E. Mill so it should be quick (Expecting $900 net income from this one)
Walnut closes supposedly on the 15th, very short rehab time estimated as well, $550-$600 in net monthly income expected from this property.
$437/BTC price currently / $1518 = 3.474btc dividend payout
151,537 shares / 3.474btc = 0.00002293 payout, a 39% increase from last payout.
3.474btc * 12 / 940btc (Current RENT mkt cap) = 4.4% APY
We expect another $2,000 of net income once the other properties are rented which would increase our div yield by about 60%. This includes no extra income from flipping, rent-to-own deals or other income which is what we are working towards.
Total portfolio value (once 100% occupancy & rehab) is estimated to breakdown this way :
W. Union - $115,000
Logan - $60,000 (A increase from $55,000 on last reports due to good market increases)
Scioto/Union - $85,000 (Based on a very recent, very close sale @ 20% simple ROI)
E. Mill - $80,000 (Revalued due to recent comps)
Mulberry - $75,000
Scioto - $65,000
Walnut - $75,000
Total NAV = $555,000 or 1,270btc based on current values or .0083btc/share. This does not account for cash or BTC in the bank but only assets.
Additionally we still expect a little over 100btc in the bank after all repairs are expected to be completed. This can be used on an additional property purchase should we so choose.
Walnut inspection was completed today, a few leaks in the house, gonna ask for $750 off list price due to the issues (Nothing overly major thankfully). Otherwise property is as it seems to be, not a ton of work needed.
Sounds like a good place to make some nice gains on! Any word on the renters that hadn't paid yet?
They paid up
Walnut inspection was completed today, a few leaks in the house, gonna ask for $750 off list price due to the issues (Nothing overly major thankfully). Otherwise property is as it seems to be, not a ton of work needed.
Looks like a fix me up from the outside but from the inside looks nice
Just a bit of paint and maybe change the bathroom tiles stove sidings 2nd bedroom 3 and fence (wood for front porch) little touches to raise the house value.
Still a nice prospective house some of those rooms look great assuming no asbestos
Just a bit of paint and maybe change the bathroom tiles stove sidings 2nd bedroom 3 and fence (wood for front porch) little touches to raise the house value.
Still a nice prospective house some of those rooms look great assuming no asbestos
It isn't a bad house at all, will look tons better when we get it done. The best part is that it was re-wired no less than the late 1970s. This is very good because they cut out (And it's obvious) the old wiring from the 1920s-30s and replaced it with new stuff. Old KnT wiring always scares me due to how often fires happen with the stuff. KnT wiring eventually dries out and then you're left with bare wires running around your house. You're just 1 short away from a fire.
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Looks like a fix me up from the outside but from the inside looks nice
Just a bit of paint and maybe change the bathroom tiles stove sidings 2nd bedroom 3 and fence (wood for front porch) little touches to raise the house value.
Still a nice prospective house some of those rooms look great assuming no asbestos
Just a bit of paint and maybe change the bathroom tiles stove sidings 2nd bedroom 3 and fence (wood for front porch) little touches to raise the house value.
Still a nice prospective house some of those rooms look great assuming no asbestos
Here's a short demo video of property #7 - https://www.youtube.com/watch?v=U70UGIPvIeE
Right now we're looking at a frontend for the consumer/DIY portal. The vote was "Property Emperor" in the chat, so we're using that for the time being as the front-end name for consumers for the videos.
Right now we're looking at a frontend for the consumer/DIY portal. The vote was "Property Emperor" in the chat, so we're using that for the time being as the front-end name for consumers for the videos.
Will be buying shares soon.
Keep it up
Keep it up
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