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Details of ICC-Austin's debt

 If the terms on this page don't make sense to you then, learn all about mortgages.


Current Debt

At staff's urging, the board agreed to have staff explore permanent refinancing (getting a loan with no balloon). Staff shopped our debt aggressively and were able to get excellent terms:

As of March 2004, ICC had a commitment from Bank of America to refinance our $1.8 million in debt at 6.35% for 15 years, with no balloon. We'll make about $190k in payments annually. 

It's kind of tricky to figure out exactly how much this saves us in interest, because the two old loans we combined had 5-year balloons, and there's no telling what interest rate we would have gotten five years from now. Plus, one of the loans had a variable rate to boot. If we assume a 7.5% interest rate for both the old loans, then refinancing saves us $674,000 over the life of the loans.

Historical Debt
1970's. We bought our first house in 1970 and most of the rest by 1975. We had a cocktail of mortgages covering all of them. I don't have many details about these individual mortgages.

1983. We spent $1.2M to buy three crappy, overpriced apartment complexes. We financed it with a regular mortgage of $800k and we borrowed another $400k against the houses we already owned. We lost money on these overpriced apartments hand over fist right away and immediately tried to sell them. By the time we sold the last one in 1989 we'd lost about $700k on that debacle.

1992. Refinanced with an interest-only loan, meaning our payments didn't reduce our debt. Unfortunately this was the only kind of loan we could get.

1995. Finally got permanent financing: We refinanced all houses with a normal 15-year mortgage, $670k debt, 10.388% interest. This was our first permanent financing in years.

2001. To cover the lost rent from Arrakis which burned down in Dec. 2000, and also because interest rates were ridiculously low, we refinanced. We combined the ~$551k left n our mortgage with the ~$220k left on our NCB renovation loan, and refinanced the ~$731k total at 8% for 15 years. That reduced our yearl debt payments from ~$160k to ~$85k, saving us ~$75k/year. The icing on the cake was that we'd pay only an extra ~$21k in interest over the life of the loan by extending the term, because the interest rate was so low. Another bonus: The bank let us use only two houses as equity instead of all five, meaning that we now own three houses free and clear (plus one charred lot).

2003. We refinanced again, combining our existing loan with money we borrowed to buy 1910 Rio Grande. Terms were $1.17M principal, 20-year amortization, 6.5% for five years, annual payments of ~$106k, and a balloon in five years. (Ack! Return of the balloon!) Collateral is Helios, French, and Royal.

When we rebuilt Arrakis we got a loan to do that: $616k principal, 20-year amortization, variable interest rate starting at 7% (1.5% over prime at closing, fixed for 3 years, with a cap of 8%, and then fixed for another 3 years, but the balloon will be due first at 5 years), initial annual payments of ~$58,146, 5-year balloon (ack!). Closing costs were around $7k (appraisal, insurance, etc.).

2004. See "Current Debt" at the top of this page.

Michael Bluejay's info & resources about

Michael Bluejay's Home Page | Email me

Home Austin Co-ops ICC History Articles & Resources