The real estate market continues to improve in most parts of the country with the Bay Area being one of the brighter markets. This fact increases the value of our land contracts and non-performing notes by increasing the underlying value of the real estate.

Our asset managers have been working away at the large Citibank pool of mortgages that we purchased in December, which were transferred to us in February. Most of this pool had real estate values on the high-end of our typical trading range. For this reason, we have been seeking more grant deeds in lieu of foreclosure and have been experiencing great success thus far. We are creating our own population of REO’s that, after repairs, will be selling through our Realtors for cash.

We have also had success working with the various states’ “Hardest Hit Funds” (HHF) programs. We are helping borrowers fill out paperwork and mail in necessary documentation. There is a substantial amount of paperwork but, if approved, the lender (us) and the borrower both end up in a much better position. The HHF program will pay lenders up to $30k to help borrowers catch up on their loans and, under certain circumstances, will make payments to lenders while unemployed borrowers get back on their feet. We are aggressively working with this program and will continue to do so.

You will notice an increase in the beginning balance on your statement for this quarter. Adjustments were made that resulted in an increase to net income for 2012. The IRS requires the fund to recognize gains on loan modifications/conversions to REO’s as income. These gains were also recorded on the books in order to accurately follow tax and ensure that no additional tax would be paid when they are eventually sold or paid off.

A check was mailed to you in mid-April to assist you with your 2012 taxes. The fund ended the year with taxable income of approximately $820,000 and we distributed 30% of this according to your proportional ownership at December 31, 2012.

Performance Statistics

1st Quarter 2013 Total Fund Rate of Return: 14.27%

Total Fund Annualized Return Since Inception: 32.98%

Featured Asset:


Our featured property this month is a 2-bedroom, 1-bathroom, single family home located at 1208 Hoods Creek Pike in Ashland, Kentucky. The total lot size is 14,810sqft.

Investment Stats (rounded):

  • Purchase Price: $4,822
  • Estimated Costs: $100
  • Sales Price: $21,000
  • Profit: $16,078



Fund Performance:

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