Investment Bulletin


Loan Number: 1035
Loan Amount:
$246,349.98
Type: First Trust Deed
Yield: 12.0%

**** For Instructions on How to Invest in this Loan ****


TERMS

Terms of Investment . . . . . . . . . . . . 60 months
Current interest rate . . . . . . . . . . . . . . . .12.0%*
Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N/A
Spread over the index . . . . . . . . . . . . . . . . .N/A
Frequency of rate changes . . . . . . . . . . . . N/A
Interest rate ceiling. . . . . . . . . . . . . . . . . . . N/A
Interest rate floor. . . . . . . . . . . . . . . . . . . . .N/A
Discount points to the lender . . . . . . . . . .N/A
Repayment schedule . . . 30 year amortization
Monthly payment . . . . . . . . . . . . . . .$2,533.98*
Frequency of payment change . . . . . . . . .N/A
Purchase price of the note . . . . . . . . .$246,350
Current balance on the note . . . . . . . $246,350
Maturity date . . . . . . . . . . . . . . . . . . 60 months
Balloon payment after 60 mos.app. . .$245,305
Late charge amount . . . . . . . . . . . . . . . .$284.44
Prepayment penalty . . . . . . . . . . . . . . . . .None
*Net of servicing costs

EQUITY ANALYSIS

Appraised Value as of July 31, 1998. . . . . . . .$385,100
Less Senior Liens
First trust deed of . . . . . . . . . . . . . . . . . . . . . . . . . . $
Beneficiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
P&I payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$
Interest rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . %
Matures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Second trust deed of . . . . . . . . . . . . . . . . . . . . . . . $
Beneficiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
P&I payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  $
Interest rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . %
Matures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Third trust deed of . . . . . . . . . . . . . . . . . . . . . . . . . $
Beneficiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
P&I payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$
Interest rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . %
Matures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Protective equity . . . . . . . . . . . . . . . . . . . . . . . $138,750
Loan-to-value ratio . . . . . . . . . . . . . . . . . . . . . . .63.9%

PROPERTY

Project: SHOPKEEPER AT THE BEACH #6

Property address: 704 Seacoast Drive, Imperial Beach, CA 91932

Description: This property is a 3-story mixed
use condominium.  The street level has office/
work space and the upstairs is the living
quarters.  This is a brand new complex one
block from the beach.

OPERATING STATEMENT

INCOME
Rental Income . . . . . . . . . . . . . . . . . . . . . .$
Laundry & Other net income. . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . Total Income: $
Less % Vacancy Allowance . . . . . . . . . .
. . . . . . . . . . . . .Effective Gross Income $

EXPENSES
Gas and electric . . . . . . . . . . . . . . . .$
Insurance . . . . . . . . . . . . . . . . . . . . . .
Mgmt. offsite . . . . . . . . . . . . . . . . . . .
Mgmt. onsite . . . . . . . . . . . . . . . . . . . 
Repairs & maint. . . . . . . . . . . . . . . . .
Pest Control. . . . . . . . . . . . . . . . . . . .
Supplies . . . . . . . . . . . . . . . . . . . . . . .
Taxes . . . . . . . . . . . . . . . . . . . . . . . . . .
Trash . . . . . . . . . . . . . . . . . . . . . . . . . .
Water & Sewer. . . . . . . . . . . . . . . . . .
Reserves for replacement . . . . . . . .
Miscellaneous  . . . . . . . . . . . . . . . . .
Legal & Audit . . . . . . . . . . . . . . . . . .
Telephone / Cable . . . . . . . . . . . . . . .
Total Expenses . . . . . . . . . . . . . . . . .$
   
NET OPERATING INCOME . . . . .$
Note: Borrower has $300,000 cash in the bank to handle the payments.

BORROWERS

Name(s). . . . . . . . . . . Individuals
Net worth . . . . . . . . . . $2,144,752
His occupation . . . . . Developer
Employer . . . . . . . . . . . . . . . .Self
Employment income . . . . . . . . .
Her occupation . . . . . housewife
Employer . . . . . . . . . . . . . . . . . .
Employment income. . . . . . . . . .
Other income. . . . . . . . . .$21,133
Percent ownership . . . . . 100.0%
Name(s). . . . . . . . . . . . . . . . . . . .
Net worth . . . . . . . . . . . . . . . . . .
His occupation. . . . . . . . . . . . . .
Employer . . . . . . . . . . . . . . . . . . .
Employment income . . . . . . . . .
Her occupation. . . . . . . . . . . . . .
Employer . . . . . . . . . . . . . . . . . . .
Employment income. . . . . . . . . .
Other income. . . . . . . . . . . . . . . .
Percent ownership . . . . . . . . . . .
Name(s). . . . . . . . . . . . . . . . . . . .
Net worth . . . . . . . . . . . . . . . . . .
His occupation. . . . . . . . . . . . . .
Employer . . . . . . . . . . . . . . . . . . .
Employment income . . . . . . . . .
Her occupation. . . . . . . . . . . . . .
Employer . . . . . . . . . . . . . . . . . . .
Employment income. . . . . . . . . .
Other income. . . . . . . . . . . . . . . .
Percent ownership . . . . . . . . . . .

payment1035.jpg (29954 bytes)

SHOPKEEPER AT THE BEACH

At 70% loan-to-value, this was a darn good private trust deed investment. But look now!

*******************************************************
We have lowered the loan-to-value ratio on this deal to only 65%!
*******************************************************

The subject property is a brand new, mixed-use condominium. The buyer gets a retail shop on the ground floor and a residential unit above it in which to live. You wander downstairs, without rush hour traffic, to open your shop. Maybe you get up a half-hour early and sip a mocha on the beach as you watch the waves roll in. Pretty nice lifestyle, wouldn’t you say?

The unit you see in the picture is typical of the units in this project, but the chances are that this is not your unit. There are a total of eight units in this project that we are financing. The project is bright and shiny new. It was just completed. The units will be available for sale soon, so this is a great place to park some cash on a relatively short term basis. (Of course there is no guarantee of an early payoff.)

The borrower is a developer with good credit. Some of the best located properties in the world are those located along water (oceans, rivers, lakes, etc.). There is only so much waterfront property.


The mom was sobbing quietly in the corner. Suddenly the double doors flew open. The dad’s heart skipped a beat as he watched the doctor stride grimly into the waiting room. "I won’t kid you. Her condition is serious. In fact, it’s touch and go. We’ll know more in the morning. The signposts we need to watch over the night are her blood pressure and her temperature. If we can keep her systolic pressure above 65 and her temperature below 101 degrees, she might possibly survive."

The Japanese economy is in intensive care right now. The signposts we need to look for is a Nikkei Stock Index above 14,000 and a willingness on the part of the government to inject capital into the banking system. Absent these conditions, the patient will die.

Thirty percent of all bank loans in Japan are currently in default. Total Japanese bank losses are estimated at U.S. $1 trillion, one-tenth the savings of the country. In 1990 the U.S. government mobilized the R.T.C. and quickly moved hundreds of billions of bad loans off the books of banks. The U.S. taxpayers paid the price, but they also avoided the depression that Japan is currently enduring.

Japanese taxpayers are furious. Banks wrote hundreds of billions of dollars worth of speculative, insider loans during the go-go era of the late 1980's. Now the Japanese people refuse to bail out the banks. But in the process of trying to punish banks for their excesses, the Japanese people have destroyed their own banking system. Liquidity has dried up like a desert floor. No banks are lending. Small businesses, the engines of employment growth, are starved for credit. Economic growth is negative.

Japanese banks were allowed to invest their capital in stocks. As a result, as long as the Nikkei Stock Index stays above 14,000 - on paper at least - many Japanese banks are still technically solvent. But that barrier broke down several times this month.

If the Emperor died and made me Chief Japanese Honcho, this is what I would do. I would order every Japanese bank to issue three times as many shares as they have currently outstanding. I would then have the Bank of Japan buy the shares at a discounted price. Then I would order the Japanese banks to use the fresh capital to write off or write down $800 billion worth of bad loans. Get those lead-weighted suckers of the books. Finally I would order the Japanese banks to make $200,000 billion worth of new loans to small Japanese businesses unrelated to the large conglomerates.

Whatever we might say about the U.S., our banks are in pretty solid shape. Their capital ratios are the best in history. The crisis in the 1930's was exacerbated by bank failures. Not this time. Not in the U.S.

 

 

If you would like to talk to our investment department, please contact John Caldwell or Mike Thurman
at 916-338-3232 or 800-606-3232 between the hours of 8:30 a.m. and 5:00 p.m. PST Monday--Friday.

Please read our Audited Financial Statements of Blackburne & Brown, Inc.

Real Estate Broker
California Department of
Real Estate -- License Number 829677

Copyright © 1999 Blackburne & Brown Mortgage Company, Inc. All rights reserved.

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