Gary,
Can you please give me the address of the apartment complex?
Ed Lichtig
(800) 888-3638
-------------------------------------------
Ed,
1220 - 1248 Kings Cross; 1200 - 1214 Kings Circle;1215 - 1225 Kings
Court in West Chicago, IL.
Gary
-------------------------------------------
Gary,
Do you really think we are going to be funding on June 29th? I have
had my money with you earning money market returns for about 9 months.
Glad you renegotiated the price to reflect today's market.
Why did you mention the other property?
How long a hold do you anticipate once it is funded?
Ed
-------------------------------
Ed,
1. The closing date is scheduled for June 29th. I believe we will.
2. When we close this property you will have earned far more than
money market rates up to that date. You will have received interest
the value of a BELOW MARKET property. We could sell the property for
a profit the same day we buy it. As I have stated before we do not
buy at the market. This was a deal at the price we originally contracted.
Our 2-3 month delay due to renegotiations did not bring us to "today's
market". We are more than $4,500,000 below market. That amount
is shared by the people who invest in this property. You can add that
% to the % of interest you earned while you were waiting.
3. I mentioned the other property because we let our investors know
about any projects coming up that we have under contract.
4. We have 3 exit strategies for this property.
A. condo 240 units starting in 1-2 years holding the rest longer term.
Refinancing those in 3-5 years returning most, if not all of your
capital while still owning the property.
B. Selling off a couple of smaller complexes (5 buildings each) and
holding the rest (see A.).
C. Hold the entire complex and refinance in 3-5 years and return
most if not all of the investor capital and still own the property.
At that time, you return on investment would be infinite, because
you would have no money invested.
If you have any other questions please call.
Gary
---------------------------------
Gary,
Let's talk about the current investment (which I assume is similar
to others).
1) the apartment complex is about 30 million (correct?).
2) The investors are x (how much) You mentioned 4 million from your
group and then more from another group.
3) The loan amount is y (how much).
I am trying to ascertain the loan to value and who has the safest
position.
Also I did a credit check on you when we started. It came in at 680.
Is it higher today? Why isn't it at 800?
4) Who gave you the loan and why did they give it to you?
Call me when you have the chance.
Ed Lichtig
(800) 888-3638
--------------------------------
Ed,
1. We signed the new amendment with the price change this afternoon.
The price is $30,000,000.
2. We are accumulating $ 8,750,000 from the investors. That includes
the down payment, closing costs, environmental reports, points for
the loan, money for upgrading the property and cash flow reserve.
3. The loan amount is $24,000,000.
4. My current score is 742 as of March 3, 2007. The score can vary
for different reasons. One can be the number of inquiries. If I'm
applying for loans and/or others check my credit, the number of inquiries
can become a negative against my credit.
5. We received the loan commitment in 4 days from Parkway Bank &
Trust. This was at the higher price with a loan for $28,000,000. They
are redoing the commitment for the current value. They gave it because
of our track record with them.
Talk to you soon.
Gary
--------------------------
Gary,
Thanks for your thorough answers. A few more questions.
Is Parkway the one who is giving you the loan at the low yield around
6%? Also within the investors, I assume that the CD buyers (the deal
you mentioned at 9%) are the top of the pecking order among investors,
is that correct?
Thanks for your answers again.
Ed
---------------------------------
Ed,
Parkway is not the bank at the 6% rate. We are still negotiating
terms with a competitive bank.
There is no pecking order among investors. Any due dates are met
with any lenders, whatever the rate. When ever there is a sale of
a property the investors are given the option of receiving any or
all of their investment and profit. Any funds they wish to reinvest
with us earns interest (3%) until it is reinvested. Everyone is treated
the same no matter how much they have with us or the rate of interest
they earn.
Gary
-------------------------------
Gary,
I am trying to assess what happens if there is a loss upon the sale.
Let say that you sell your apartment building for $24,000,000 (the
amount of the loan). I assume that all investors lose all their money,
is that correct?
Ed
------------------------------
Ed,
Yes, that would be correct, IF we sold for a loss.
Our alternative to selling is to hold the property for cash flow.
On this particular property, between where we can take the cash flow
plus the amount of principal being paid down each year on the mortgage
would give the investors a 6%-9% return even without appreciation.
If the value of each apartment were to diminish to $41,666 (x 576
apts. = $24,000,000) the whole country would be in deep trouble and
real estate would still be the best investment around. As an example,
if this unit was sold as a condo for $41,666 the monthly payment (with
100% financing) would be $272.12 a month for a 2 bedroom condo. It
could be renting right now for $875. I believe this scenario would
be virtually impossible or if true our country would be in a huge
economic mess.
Gary
Grow
the IRA Or Qualified Plan Dollars Without Income Or Estate Tax
