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Mortgage Investments
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Update, June 2017

We continue to fund fix&flip projects in the (still) undervalued markets within NYC commuting range. The Newark area offers by far the best developer returns/investor security: High profit margins, cash-flows, and a strong resale market. 

 

The national housing market is performing well. The National Case Schiller Index hit a new all-time high in November 2016, up from its February, 2012 low. Note that the Zillow Home Value Index for Newark hit its low in February 2014, a full 24 months later. It still lagging. While other markets have matured, Newark still appears to have significant upside potential. 

 

At the moment we invest mostly in  3-unit properties. Typical numbers are: Hard cost of $200,000, resale at $350,000. Net operating incomes of $30,000+. At a cap rate of 8-9%, and 125% debt service coverage (at our 12% rate!), higher resale values are indicated. 

 

As you are probably aware, investments are currently structured in one of two ways:

 

1. Mortgage with 6 months payments pre-paid

60% loan to value, 12 month balloon, interest only payments of 1% per month with the first 6 months' payments prepaid. You only fund 94% of the loan amount. The 6-12 month yield is 12.89%.-13.21%, depending on the month of payout. Current investment

 

2. Mortgage with 6 months payments postponed
65% loan to value, 12 month balloon, interest only payments of 1% per month with the first 6 months’ payments plus a 5% bonus deferred until payout. The 6-12 month yield is 16.14%-23.28%, depending on the month of payout. Current investment

 

You can review the investment strategy here.

 

Please contact me if you have questions, or interest in either one of the current investments.

Paul.


                                        

Paul Luykx, CEO
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