Hey everyone, it's Greg Saunders with GJS Capital Ventures and today we are looking for a joint venture partner on a note down in San Antonio. The note is on Burke Street, southwest San Antonio and the house is just a little under 800 square foot, 2 bedroom, 1 bath. The neighborhood is a "C" for schools, a "B" for crime. Your run of the mill, blue collar, middle class area for San Antonio.
When you look at photos of the property you can see it looks well maintained. I haven't seen it in person but I'll be heading down this weekend.
If you take a look at the rental values, you can see that we have the rents on the property are about $750 to $825. Taxes are paid off. To update would be a minimal repair budget of about $6,1900 (If we have to use the turn key model as our exit strategy.) The value of the house, when we do our internal evaluations, is anywhere from $42,000 to $63,000 but we're ball parking at about $50,000 and I'm pretty confident with that price.
Now, for you as an investor, the important things to know are the original balance was $38,000. The current UPB is $32,000 with arrears of about $8,600 or a total debt of $41,000. This home owner has modified the loan in the past, but the thing about it is now they have a 10% interest loan amortized over 30 years. I'm fairly confident that if we went to them and said, "You interest rate is at 10, market's at 4.5, what can we do to help”, that they would be willing to talk with our specialty lenders to get refinanced.
If we look our cost basis or acquisition cost is about $22,000, that's 44% of the value or 67% of the UPB. If we have to take the property back as an REO or do the turn key model, we've got about 67% equity in there. We're roughly $19,000, so $18,800 as the amount. Because this note is in Texas and Texas is a non-judicial state, we get foreclosures going 3 months. $3,600 will be the foreclosure costs, and that's high balling it.
If we do get them reinstated at the 10%, we're looking at about a 30% annualized return.
If we do get that payoff, again it was a 10% note, we're looking at just a shade under $20,000 as that pay off amount.
Worst case scenario, if we have to turn it into a rental and sell on the turn key model, at least the market value of the house goes from $50,000 to about $65,000 due to the high rents relative to the price of the home.
On this particular deal we're willing to structure either as a straight loan, interest only for 12 months with interest payments. Or if you would like a cut in the deal as an equity partner, we can do that as well. Either way, give me a call at 512-547-7297 or send me an email: greg@gjscv and I'll talk to you soon.