2017 Year-End Report: A Year of Maturing and Expansion
By Fund Manager Datta Khalsa
“During the course of 2017, Firmus has continued to mature, expanding our net assets to over $5 Million with an increasingly diversified portfolio of loans and investment properties across five states.”
During the course of 2017, Firmus has continued to mature, expanding our net assets to over $5 Million with an increasingly diversified portfolio of loans and investment properties across five states. In the process, we’ve attained earnings of $553,449.45 for the year, providing average monthly returns of 11.5% for our investors. The majority of these earnings were attributable to appreciation on our real estate holdings, but with our two largest projects slated to sell in 2018, a majority of these returns should translate to cash earnings as those projects close.
Our 16-unit apartment complex at 1820 W. Mulberry in Phoenix is on the market for sale at a list price of $1,679,000, and we’ve adjusted its mark-to-market value accordingly in anticipation of the impending sale.
In Fresno, our 2.91-acre property at 1501 Blackstone Ave., which is in escrow for twice what we paid for it, has obtained the necessary approvals to be built out as an 88-unit apartment complex with street level retail or medical offices. We’ve conservatively set the mark-to-market value of Blackstone at several hundred thousand under the projected net proceeds, so the fund will likely net a sizeable windfall when that property closes. The project was recently featured in several news reports, as the developer awaits a final approval for tax credits through the air quality board. In the meantime, they’re paying non-refundable installments of $5,000 per month until close of escrow, slated to occur by the end of August or early September of this year.
On our various tax lien flip ventures, we’re in discussions with one joint venture partner for them to buy us out on the project that we have with them in Texas, and we’re proceeding with the rehabilitation of all three houses that we’re partnered with them on in Philadelphia. We’ve also built partnerships with two other groups on tax lien auction purchases that have resulted in picking up a commercial property in Helena, Arkansas and two homes in Cincinnati, Ohio. While relatively small, each of those projects are poised to yield significant returns over of our original investment, which will bring positive cash flow back into the fund as well.
The large Notes we funded for $1.1 Million and $800,000 that were secured by several large apartment complexes in Las Vegas, Nevada both paid off early—within several months of our funding them—freeing up capital for several of the smaller projects that our various flip partners have located for us. Since then, we’ve also funded a couple of smaller loans: one a 90-day $440,000 loan on a property in Fresno that we split with a partner, earning the fund about 14% over the course of 90 days, and the other a 2-year $250,000 loan on a 4-unit property in Chicago paying the fund a straight 14% interest rate.
The fund reached a threshold under Department of Real Estate licensing which prohibits us from writing additional loans, and so our management group is in the process of obtaining a CFL (California Finance Lender) license to enable us to comply with the annual limits allowed to continue to build the fund’s loan portfolio of high-yielding Notes and Second Trust Deeds as a commercial niche lender.
We’re also excited to have entered into a joint venture with a local development group on a property here in Santa Cruz County at 5701 Soquel which meets our ideal model of having current carrier income in place with the added benefit of significant upside potential. The property, which has two houses on it sitting on over an acre of land, was acquired for $1,310,000, with the potential for development of between 14 and 15 units, depending on whether the project is done as apartments, townhomes, or a full subdivision with single family residences.
We expect continued strong growth over the coming years for the fund, and as always, we remain vigilant to find the best opportunities available for our fund. We’re open to investor input on any project you think might be a good match for our portfolio, now at over $5 Million and growing.
Datta Khalsa is a licensed Real Estate Broker (Cal BRE#01161050) and a member of the management team for Firmus Financial, LLC. He can be reached at (831) 818-0181 or firstname.lastname@example.org.
Firmus Financial, LLC is a small-pool investment fund that is regulated by the State of California per exemption with the SEC and open to accredited investors in all 50 states. Any projections made herein, whether specific or implied are purely speculative as past results are not indicative of future performance. Prospective investors are able to purchase shares by signing a Subscription Agreement after reviewing the fund’s Operating Agreement and Private Placement Memorandum. Interested parties are advised to consult a qualified financial advisor and/or tax professional before making any investment.