Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2020 | Nov. 05, 2020 | |
Document and Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Document Period End Date | Sep. 30, 2020 | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q3 | |
Entity File Number | 001-37997 | |
Entity Registrant Name | SACHEM CAPITAL CORP. | |
Entity Incorporation, State or Country Code | NY | |
Entity Tax Identification Number | 81-3467779 | |
Entity Address, Address Line One | 698 Main Street, | |
Entity Address, City or Town | Branford | |
Entity Address, State or Province | CT | |
Entity Address, Postal Zip Code | 06405 | |
City Area Code | 203 | |
Local Phone Number | 433-4736 | |
Entity Current Reporting Status | Yes | |
Entity Central Index Key | 0001682220 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | false | |
Entity Shell Company | false | |
Trading Symbol | SACH | |
Entity Common Stock, Shares Outstanding | 22,124,801 | |
Entity Interactive Data Current | Yes | |
Title of 12(b) Security | Common Shares, par value $.001 per share | |
Security Exchange Name | NYSE |
BALANCE SHEETS
BALANCE SHEETS - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 |
Assets: | ||
Cash and cash equivalents | $ 5,384,073 | $ 18,841,937 |
Investments | 27,688,794 | 15,949,802 |
Mortgages receivable | 124,131,879 | 94,348,689 |
Interest and fees receivable | 1,551,333 | 1,370,998 |
Other receivables | 87,307 | 141,397 |
Due from borrowers | 1,501,470 | 840,930 |
Prepaid expenses | 106,816 | 24,734 |
Property and equipment, net | 1,418,442 | 1,346,396 |
Deposits on property and equipment | 172,210 | 71,680 |
Real estate owned | 7,523,584 | 8,258,082 |
Deferred financing costs | 66,086 | 16,600 |
Total assets | 169,631,994 | 141,211,245 |
Liabilities: | ||
Notes payable (net of deferred financing costs of $3,074,115 and $2,687,190) | 69,452,636 | 55,475,810 |
Mortgage payable | 771,785 | 784,081 |
Line of credit | 12,080,569 | 0 |
Accounts payable and accrued expenses | 522,453 | 249,879 |
Other loans | 257,845 | 0 |
Security deposits held | 13,416 | 7,800 |
Advances from borrowers | 1,413,974 | 848,268 |
Deferred revenue | 1,114,721 | 1,205,740 |
Notes payable | 60,130 | 75,433 |
Accrued interest | 80,672 | 3,416 |
Total liabilities | 85,768,201 | 58,650,427 |
Commitments and Contingencies | ||
Shareholders' equity: | ||
Preferred shares - $.001 par value; 5,000,000 shares authorized; no shares issued | 0 | 0 |
Common stock - $.001 par value; 100,000,000 shares authorized; 22,117,301 issued and outstanding | 22,117 | 22,117 |
Paid-in capital | 83,810,276 | 83,856,308 |
Accumulated other comprehensive loss | (37,596) | (50,878) |
Retained earnings (accumulated deficit) | 68,996 | (1,266,729) |
Total shareholders' equity | 83,863,793 | 82,560,818 |
Total liabilities and shareholders' equity | $ 169,631,994 | $ 141,211,245 |
BALANCE SHEETS (Parenthetical)
BALANCE SHEETS (Parenthetical) - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 |
BALANCE SHEETS | ||
Deferred financing costs | $ 3,074,115 | $ 2,687,190 |
Preferred Stock, Par or Stated Value Per Share | $ 0.001 | $ 0.001 |
Preferred Stock, Shares Authorized | 5,000,000 | 5,000,000 |
Preferred Stock, Shares Issued | 0 | 0 |
Common Stock, Par or Stated Value Per Share | $ 0.001 | $ 0.001 |
Common Stock, Shares Authorized | 100,000,000 | 100,000,000 |
Common Stock, Shares, Issued | 22,117,301 | 22,117,301 |
Common Stock, Shares, Outstanding | 22,117,301 | 22,117,301 |
STATEMENTS OF COMPREHENSIVE INC
STATEMENTS OF COMPREHENSIVE INCOME - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Revenue: | ||||
Interest income from loans | $ 3,473,304 | $ 2,442,750 | $ 9,640,387 | $ 7,509,155 |
Interest income on investments | 32,483 | 28,148 | 163,161 | 28,148 |
Gain/(loss)on sale of investment securities | (21,858) | 0 | 415,301 | 0 |
Origination fees, net | 393,097 | 497,237 | 1,551,652 | 1,202,777 |
Late and other fees | 10,955 | 18,149 | 46,835 | 205,182 |
Processing fees | 37,445 | 44,870 | 123,568 | 121,470 |
Rental income, net | 9,593 | 9,446 | 49,777 | 82,350 |
Other income | 336,789 | 325,523 | 904,071 | 622,054 |
Net gain on sale of real estate | 0 | 12,927 | 0 | 20,076 |
Total revenue | 4,271,808 | 3,379,050 | 12,894,752 | 9,791,212 |
Operating costs and expenses: | ||||
Interest and amortization of deferred financing costs | 1,262,278 | 537,878 | 3,564,533 | 1,611,332 |
Compensation, fees and taxes | 496,058 | 476,404 | 1,220,412 | 1,325,822 |
Stock based compensation | 4,107 | 4,107 | 12,321 | 12,327 |
Professional fees | 158,206 | 105,053 | 400,868 | 259,275 |
Other expenses and taxes | 26,247 | 39,355 | 61,484 | 70,683 |
Exchange fees | 22,713 | 11,343 | 29,986 | 32,850 |
Expense in connection with termination of LOC | 0 | 0 | 0 | 779,641 |
Impairment | 0 | 0 | 495,000 | 0 |
Net loss on sale of real estate | 2,816 | 0 | 7,276 | 0 |
Depreciation | 15,348 | 18,618 | 46,318 | 44,286 |
General and administrative expenses | 145,251 | 131,206 | 412,677 | 400,561 |
Total operating costs and expenses | 2,133,024 | 1,323,964 | 6,250,875 | 4,536,777 |
Net income | 2,138,784 | 2,055,086 | 6,643,877 | 5,254,435 |
Other comprehensive income (loss) | ||||
Unrealized gain (loss) on investment securities | (72,785) | 0 | 13,282 | 0 |
Comprehensive income | $ 2,065,999 | $ 2,055,086 | $ 6,657,159 | $ 5,254,435 |
Basic and diluted net income per common share outstanding: | ||||
Basic | $ 0.10 | $ 0.10 | $ 0.30 | $ 0.30 |
Diluted | $ 0.10 | $ 0.10 | $ 0.30 | $ 0.30 |
Weighted average number of common shares outstanding: | ||||
Basic | 22,117,301 | 21,336,870 | 22,117,301 | 17,662,480 |
Diluted | 22,117,301 | 21,336,870 | 22,117,301 | 17,622,480 |
STATEMENT OF CHANGES IN SHAREHO
STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY - USD ($) | Common SharesATM | Common Shares | Additional Paid-in CapitalATM | Additional Paid-in Capital | Accumulated Other Comprehensive Income/(Loss) | (Accumulated Deficit) Retained Earnings | ATM | Total |
Beginning balance at Dec. 31, 2018 | $ 15,439 | $ 53,192,859 | $ (405,483) | $ 52,802,815 | ||||
Beginning balance (in shares) at Dec. 31, 2018 | 15,438,621 | |||||||
Sales of stock | $ 4,333 | $ 2,300 | $ 19,832,267 | 10,668,202 | $ 19,836,600 | 10,670,502 | ||
Sales of stock (in shares) | 2,300,000 | |||||||
Exercise of warrants | $ 16 | 82,019 | 82,035 | |||||
Exercise of warrants (in shares) | 16,407 | |||||||
Stock based compensation | 12,327 | 12,327 | ||||||
Dividends paid | (4,403,181) | (4,403,181) | ||||||
Net income | 5,254,435 | 5,254,435 | ||||||
Balance at Sep. 30, 2019 | $ 22,088 | 83,787,674 | 445,771 | 84,255,533 | ||||
Balance (in shares) at Sep. 30, 2019 | 22,088,325 | |||||||
Beginning balance at Jun. 30, 2019 | $ 18,906 | 68,658,030 | 739,137 | 69,416,073 | ||||
Beginning balance (in shares) at Jun. 30, 2019 | 18,905,586 | |||||||
Sales of stock | $ 866 | $ 2,300 | $ 4,375,320 | 10,668,202 | $ 4,376,186 | 10,670,502 | ||
Sales of stock (in shares) | 866,332 | 2,300,000 | ||||||
Exercise of warrants | $ 16 | 82,019 | 82,035 | |||||
Exercise of warrants (in shares) | 16,407 | |||||||
Stock based compensation | 4,103 | 4,103 | ||||||
Dividends paid | (2,348,452) | (2,348,452) | ||||||
Net income | 2,055,086 | 2,055,086 | ||||||
Balance at Sep. 30, 2019 | $ 22,088 | 83,787,674 | 445,771 | 84,255,533 | ||||
Balance (in shares) at Sep. 30, 2019 | 22,088,325 | |||||||
Beginning balance at Dec. 31, 2019 | $ 22,117 | 83,856,308 | $ (50,878) | (1,280,011) | 82,547,536 | |||
Beginning balance (in shares) at Dec. 31, 2019 | 22,117,301 | |||||||
Offering costs-ATM | (58,353) | (58,353) | ||||||
Stock based compensation | 12,321 | 12,321 | ||||||
Unrealized gain on marketable securities | 13,282 | 13,282 | ||||||
Dividends paid | (5,308,152) | (5,308,152) | ||||||
Net income | 6,657,159 | 6,657,159 | ||||||
Balance at Sep. 30, 2020 | $ 22,117 | 83,810,276 | (37,596) | 68,996 | 83,863,793 | |||
Balance (in shares) at Sep. 30, 2020 | 22,117,301 | |||||||
Beginning balance at Jun. 30, 2020 | $ 22,117 | 83,806,169 | 35,189 | 584,288 | 84,447,763 | |||
Beginning balance (in shares) at Jun. 30, 2020 | 22,117,301 | |||||||
Stock based compensation | 4,107 | 4,107 | ||||||
Unrealized gain on marketable securities | (72,785) | (72,785) | ||||||
Dividends paid | (2,654,076) | (2,654,076) | ||||||
Net income | 2,138,784 | 2,138,784 | ||||||
Balance at Sep. 30, 2020 | $ 22,117 | $ 83,810,276 | $ (37,596) | $ 68,996 | $ 83,863,793 | |||
Balance (in shares) at Sep. 30, 2020 | 22,117,301 |
STATEMENTS OF CASH FLOW
STATEMENTS OF CASH FLOW - USD ($) | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net income | $ 6,643,877 | $ 5,254,435 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Amortization of deferred financing costs | 357,497 | 159,872 |
Depreciation expense | 46,318 | 44,286 |
Stock based compensation | 12,321 | 12,327 |
Impairment loss | 495,000 | 0 |
Loss (gain) on sale of real estate | 7,276 | (20,076) |
Abandonment of office furniture | 0 | 12,000 |
Costs in connection with termination of line of credit | 439,446 | |
Realized gain on investments | (415,301) | 0 |
(Increase) decrease in: | ||
Escrow deposits | 0 | 12,813 |
Interest and fees receivable | (180,335) | (454,487) |
Other receivables | 54,090 | (67,237) |
Due from borrowers | (273,202) | 2,122,939 |
Prepaid expenses | (82,082) | (22,305) |
Deposits on property and equipment | (100,530) | (37,881) |
(Decrease) increase in: | ||
Due to note purchaser | 0 | (176,619) |
Accrued interest | 77,256 | 3,323 |
Accounts payable and accrued expenses | 272,574 | (159,512) |
Deferred revenue | (91,019) | 9,261 |
Advances from borrowers | 565,706 | 180,889 |
Total adjustments | 745,569 | 2,059,039 |
NET CASH PROVIDED BY OPERATING ACTIVITIES | 7,389,446 | 7,313,474 |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Purchase of investments | (37,216,177) | 0 |
Proceeds from the sale of investments | 25,905,769 | 0 |
Proceeds from sale of real estate owned | 1,816,522 | 362,136 |
Acquisitions of and improvements to real estate owned | (1,584,300) | (443,217) |
Purchase of property and equipment | (118,364) | (196,603) |
Security deposits held | 5,616 | 0 |
Principal disbursements for mortgages receivable | (68,029,798) | (42,163,704) |
Principal collections on mortgages receivable | 37,859,270 | 27,917,331 |
NET CASH USED FOR INVESTING ACTIVITIES | (41,361,462) | (14,524,057) |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Proceeds from line of credit | 14,080,569 | 42,720,829 |
Repayment of line of credit | (2,000,000) | (69,939,952) |
Proceeds from notes sold to shareholder | 0 | 1,017,000 |
Repayment of notes sold to shareholder | 0 | (2,217,000) |
Principal payments on mortgage payable | (12,296) | 0 |
Principal payments on notes payable | (15,303) | 0 |
Dividends paid | (5,308,152) | (7,027,746) |
Financing costs incurred | (108,353) | (6,836) |
Proceeds from other loans | 257,845 | 0 |
Proceeds from mortgage payable | 0 | 795,000 |
Repayment of mortgage payable | 0 | (297,837) |
Proceeds from notes payable, net | 0 | 68,634 |
Proceeds from issuance of common stock | 0 | 30,736,148 |
Costs associated with the issuance of common stock | 0 | (147,002) |
Gross proceeds from issuance of fixed rate notes | 14,363,750 | 23,663,000 |
Financing costs incurred in connection with fixed rate notes | (743,908) | (1,307,571) |
NET CASH PROVIDED BY FINANCING ACTIVITIES | 20,514,152 | 18,056,667 |
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS | (13,457,864) | 10,846,084 |
CASH AND CASH EQUIVALENTS- BEGINNING OF YEAR | 18,841,937 | 158,859 |
CASH AND CASH EQUIVALENTS - END OF PERIOD | 5,384,073 | 11,004,943 |
SUPPLEMENTAL DISCLOSURES OF CASH FLOWS INFORMATION | ||
Taxes paid | 0 | 0 |
Interest paid | 2,093,080 | 472,329 |
SUPPLEMENTAL INFORMATION-NON-CASH | ||
Dividends declared and payable | $ 0 | $ 0 |
STATEMENTS OF CASH FLOW (Parent
STATEMENTS OF CASH FLOW (Parenthetical) - USD ($) | 9 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2020 | |
STATEMENTS OF CASH FLOW | ||
Real estate acquired in connection with the foreclosure of certain mortgages, inclusive of interest and other fees receivable | $ 2,265,927 | $ 170,383 |
Purchase of equipment subject to capital lease | 13,005 | |
Reclassification of mortgage receivable | 879,457 | |
Remaining balance of mortgages receivable | $ 0 |
The Company
The Company | 9 Months Ended |
Sep. 30, 2020 | |
The Company | |
The Company | 1. The Company Sachem Capital Corp. (the “Company”), a New York corporation, specializes in originating, underwriting, funding, servicing and managing a portfolio of first mortgage loans. The Company offers short term ( i.e. one ), secured, loans (sometimes referred to as “hard money” loans) to real estate owners and investors to fund their acquisition, renovation, development, rehabilitation or improvement of properties located primarily in Connecticut. The properties securing the Company’s loans are generally classified as residential or commercial real estate and, typically, are held for resale or investment. Each loan is secured by a first mortgage lien on real estate and may also be secured with additional collateral, such as other real estate owned by the borrower or its principals or a pledge of the ownership interests in the borrower by the principals thereof, as well as personal guarantees by the principals of the borrower. The Company does not lend to owner occupants. The Company’s primary underwriting criteria is a conservative loan to value ratio. In addition, the Company may make opportunistic real estate purchases apart from its lending activities. The Company believes it qualifies and has operated as a real estate investment trust since 2017. |
Significant Accounting Policies
Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2020 | |
Significant Accounting Policies | |
Significant Accounting Policies | 2. Significant Accounting Policies Unaudited Financial Statements The accompanying unaudited financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) for interim financial information. Accordingly, they do not include all the information and footnotes required by GAAP for complete financial statements. However, in the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Results of operations for the interim periods are not necessarily indicative of the operating results to be attained in the entire fiscal year. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Management’s estimates are based on (a) assumptions that consider the Company’s past experience, (b) projections regarding the Company’s future operations and (c) general financial market and local and general economic conditions. Actual amounts could differ from those estimates. Cash and Cash Equivalents The Company considers all demand deposits, cashier’s checks, money market accounts and certificates of deposit with an original maturity of three months or less to be cash equivalents. The Company maintains its cash and cash equivalents at various financial institutions. The account balances typically exceed the Federal Deposit Insurance Corporation insurance coverage, and, as a result, there is a concentration of credit risk related to amounts on deposit. The Company does not believe that the risk is significant. Allowance for Loan Loss The Company reviews each loan on a quarterly basis and evaluates the borrower’s ability to pay the monthly interest, the borrower’s likelihood of executing the original exit strategy, as well as the loan-to-value (LTV) ratio. Based on the analysis, management determines if any provisions for impairment of loans should be made and whether any loan loss reserves are required. Fair Value Measurements The framework for measuring fair value provides a fair value hierarchy that prioritizes inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy under Financial Accounting Standards Board Accounting Standards Codification (“FASB ASC”) 820 are described as follows: Level 1 Level 2 ● quoted prices for similar assets or liabilities in active markets; ● quoted prices for identical or similar assets or liabilities in inactive markets; ● inputs other than quoted prices that are observable for the asset or liability; and ● inputs that are derived principally from or corroborated by observable market data by correlation or other means. If the asset or liability has a specified (i.e., Level 3 Property and Equipment Land and building acquired in December 2016 to serve as the Company’s office facilities is stated at cost. The building is being depreciated using the straight-line method over its estimated useful life of 40 years. Expenditures for repairs and maintenance are charged to expense as incurred. The Company relocated its entire operations to this property in March 2019. Impairment of long-lived assets The Company continually monitors events or changes in circumstances that could indicate carrying amounts of long-lived assets may not be recoverable. When such events or changes in circumstances occur, the Company assesses the recoverability of long-lived assets by determining whether the carrying value of such assets will be recovered through undiscounted expected future cash flows. If the total of the undiscounted cash flows is less than the carrying amount of these assets, the Company recognizes an impairment loss based on the excess of the carrying amount over the fair market value of the assets. Deferred Financing Costs Costs incurred by the Company in connection with the public offering of its unsecured, unsubordinated notes, described in Note 6 - Notes Payable -- are being amortized over the term of the respective Notes. Revenue Recognition Interest income from the Company's loan portfolio is earned, over the loan period and is calculated using the simple interest method on principal amounts outstanding. Generally, the Company's loans provide for interest to be paid monthly in arrears. The Company does not accrue interest income on mortgages receivable that are more than 90 days past due. Origination fee revenue, generally 2%- 5% of the original loan principal amount, is collected at loan funding and in connection with the extension of loans, and is recognized ratably over the contractual life of the loan in accordance with ASC 310. Income Taxes The Company believes it qualifies as a Real Estate Investment Trust (REIT) for federal income tax purposes and made the election to be taxed as a REIT when it filed its 2017 federal income tax return. As a REIT, the Company is required to distribute at least 90% of its taxable income to its shareholders on an annual basis. The Company’s qualification as a REIT depends on its ability to meet on a continuing basis, through actual investment and operating results, various complex requirements under the Internal Revenue Code of 1986, as amended, relating to, among other things, the sources of its income, the composition and values of its assets, its compliance with the distribution requirements applicable to REITs and the diversity of ownership of its outstanding common shares. So long as it qualifies as a REIT, the Company, generally, will not be subject to U.S. federal income tax on its taxable income distributed to its shareholders. However, if it fails to qualify as a REIT in any taxable year and does not qualify for certain statutory relief provisions, it will be subject to U.S. federal income tax at regular corporate rates and may also be subject to various penalties and may be precluded from re-electing REIT status for the four taxable years following the year during in which it lost its REIT qualification. The Company follows the provisions of FASB ASC Topic 740-10 “Accounting for Uncertainty in Income Taxes”, which prescribes a recognition threshold and measurement attribute for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return and disclosure required. Under this standard, an entity may only recognize or continue to recognize tax positions that meet a “more likely than not” threshold. Should the Company become liable for interest and penalties related to unrecognized tax benefits, such amounts would be included in interest expense. The Company has determined that there are no uncertain tax positions requiring accrual or disclosure in the accompanying financial statements as of September 30, 2020. Earnings Per Share Basic and diluted earnings per share are calculated in accordance with FASB ASC 260 “Earnings Per Share”. Under ASC 260, basic earnings per share is computed by dividing income available to common shareholders by the weighted-average number of common shares outstanding for the period. The computation of diluted earnings per share is similar to basic earnings per share, except that the denominator is increased to include the potential dilution from the exercise of stock options and warrants for common shares using the treasury stock method. The numerator in calculating both basic and diluted earnings per common share for each period is the reported net income. Recent Accounting Pronouncements In May 2019, the FASB issued Accounting Standards Update (“ASU”) 2019-05, “Financial Instruments—Credit Losses (Topic 326): Targeted Transition Relief," which requires that entities use a new forward looking "expected loss" model that generally will result in the earlier recognition of an allowance for credit losses. This ASU allows entities to irrevocably elect the fair value option for certain financial assets previously measured at amortized cost upon adoption of ASU 2016-13, “Measurement of Credit Losses on Financial Instruments.” The Company adopted both ASU 2016-13 and ASU 2019-05 effective January 1, 2020. The adoption of this guidance did not have a material impact on the Company’s financial statements. Management does not believe that any other recently issued, but not yet effective, accounting standards if currently adopted would have a material effect on the Company’s financial statements. Reclassifications Certain 2019 account balances have been reclassified to conform with the current year’s presentation. |
Fair Value Measurement
Fair Value Measurement | 9 Months Ended |
Sep. 30, 2020 | |
Fair Value Measurement | |
Fair Value Measurement | 3. Fair Value Measurement The fair value measurement level within the fair value hierarchy of an asset or liability is based on the lowest level of any input that is significant to the fair market value measurement. Valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs. The following table sets forth by Level, within the fair value hierarchy, the Company’s assets at fair value as of September 30, 2020: Level 1 Level 2 Level 3 Total Stocks and ETFs $ 1,332,540 — — $ 1,332,540 Fixed and Preferred Securities $ 2,862,830 — — $ 2,862,830 Mutual Funds $ 23,493,424 — — $ 23,493,424 Total Investments $ 27,688,794 — — $ 27,688,794 Real Estate Owned $ 7,523,584 $ 7,523,584 Following is a description of the methodologies used for assets measured at fair value: ● Stocks and ETFs: Valued at the closing price reported on the active market on which such securities are traded. ● Fixed and Preferred Securities: Valued at the closing price reported on the active market on which such securities are traded. ● Mutual funds: Valued at the daily closing price reported by the fund. Mutual funds held by the Company are open-end mutual funds that are registered with the Securities and Exchange Commission (the “SEC”). These funds are required to publish their daily net asset values and to transact at that price. The mutual funds held by the Company are deemed to be actively traded. ● Real estate owned: The Company estimates fair values of real estate owned using market information such as recent sales contracts, appraisals, recent sales offers, assessed values or discounted cash value models. |
Mortgages Receivable
Mortgages Receivable | 9 Months Ended |
Sep. 30, 2020 | |
Mortgages Receivable | |
Mortgages Receivable | 4. Mortgages Receivable Mortgages Receivable The Company offers secured, non-bank loans to real estate owners and investors (also known as “hard money” loans) to fund their acquisition, renovation, development, rehabilitation or improvement of properties located primarily in Connecticut. The loans are secured by first mortgage liens on one or more properties owned by the borrower or related parties. In addition, each loan is personally guaranteed by the borrower or its principals, which guarantees may be collaterally secured as well. The loans are generally for a term of one to three years . The loans are initially recorded and carried thereafter, in the financial statements, at cost. All loans provide for monthly payments of interest only (in arrears) during the term of the loan and a “balloon” payment of the principal on the maturity date. For the nine-month periods ended September 30, 2020 and 2019, the aggregate amounts of loans funded by the Company were $68,029,798 and $42,163,704 , respectively, offset by principal repayments of $37,859,270 and $27,917,331 , respectively. At September 30, 2020, the Company’s portfolio included loans with outstanding principal balances up to approximately $3.2 million, with stated interest rates ranging from 5.0% to 13.0% and a default interest rate for non-payment of 18% . At September 30, 2020, no single borrower had loans outstanding representing more than 10% of the total balance of the loans outstanding. The Company will extend the term of a loan if, at the time of the extension, the loan and the borrower satisfy the Company’s underwriting requirements at the time of the extension. The Company treats a loan extension as a new loan. Credit Risk Credit risk profile based on loan activity as of September 30, 2020 and December 31, 2019: Total Outstanding Mortgages Receivable Residential Commercial Land Mixed Use Mortgages September 30, 2020 $ 83,885,131 $ 29,316,495 $ 7,222,077 $ 3,708,176 $ 124,131,879 December 31, 2019 $ 71,605,920 $ 16,122,990 $ 5,639,979 $ 979,800 $ 94,348,689 The following are the maturities of mortgages receivable as of September 30: 2020 $ 40,472,468 2021 68,804,366 2022 12,471,850 2023 2,383,195 Total $ 124,131,879 At September 30, 2020, the Company’s mortgage loan portfolio included 480 mortgage loans, of which fourteen were the subject of foreclosure proceedings. The aggregate outstanding balances due on these fourteen loans as of September 30, 2020, including unpaid principal, accrued but unpaid interest and borrower fees, was approximately $4.0 million. In the case of each of these loans, the Company believes the value of the collateral exceeds the total amount due. In the second quarter of 2020, the Company restructured twenty-three loans, having an aggregate balance of $6.5 million at June 30, 2020, pursuant to forbearance requests by borrowers under a program the Company adopted in response to the COVID-19 pandemic. The total amount of interest deferred under these twenty-three loans was approximately $200,000. At September 30, 2020, eighteen of the original twenty-three forbearance loans, having an aggregate principal balance of $5.1 million and $146,000 of deferred interest, were still outstanding. Once a forbearance request is initiated by the borrower, the Company requests documentation to determine the validity of the request and if deemed valid and reasonable, the Company defers the borrower's payment of interest for a period of 90 days . A legal fee is the only charge passed on to the borrower. To qualify for forbearance, a borrower must be current on all its obligations to the Company. |
Real Estate Owned
Real Estate Owned | 9 Months Ended |
Sep. 30, 2020 | |
Real Estate Owned | |
Real Estate Owned | 5. Real Estate Owned Property purchased for rental or acquired through foreclosure are included on the balance sheet as real estate owned. As of September 30, 2020, and December 31, 2019, real estate owned totaled $7,523,584 and $8,258,082, respectively. As of September 30, 2020, real estate owned included $1,478,854 of real estate held for rental and $6,044,730 of real estate held for sale. In the first nine months of 2020, the Company recorded an impairment loss of $495,000 compared to an impairment loss of $-0- in the first nine months of 2019. |
Notes Payable
Notes Payable | 9 Months Ended |
Sep. 30, 2020 | |
Notes Payable | |
Notes Payable | 6. Notes Payable At September 30, 2020, the Company had three series of unsecured unsubordinated notes issued and outstanding having an outstanding aggregate principal amount of of its 30, commencing September 30, 2019 for the June Notes, December 30, 2019 for the December Notes and December 30, 2020 for the September Notes . The June Notes, December Notes and September Notes mature, and all amounts outstanding thereunder including principal, accrued but unpaid interest and any other fees and costs, June 30, 2024, December 30, 2024 and September 30, 2025, respectively. So long as the Notes are outstanding, the Company is prohibited from making distributions in excess of 90% of its taxable income, incurring any additional indebtedness for borrowed money or purchasing any shares of its capital stock unless it has an “Asset Coverage Ratio” of at least 150% after giving effect to the payment of such dividend, the incurrence of such indebtedness or the application of the net proceeds, as the case may be. The Company may redeem the Notes, in whole or in part, without premium or penalty, at any time after June 25, 2021, in the case of the June Notes, November 7, 2021, in the case of the December Notes, and September 4, 2022, in case of the September Notes, upon at least 30 days |
Line of Credit
Line of Credit | 9 Months Ended |
Sep. 30, 2020 | |
Line of Credit | |
Line of Credit | 7. Line of Credit During the nine months ended September 30, 2020, the Company obtained a $12.1 million priority credit line from Wells Fargo, which is secured by the Company's portfolio of short-term securities. The credit line bears interest at a rate equal to 1.5% below the prime rate (1.75% at September 30, 2020). |
Other income
Other income | 9 Months Ended |
Sep. 30, 2020 | |
Other income | |
Other income | 8. Other income For the three-month and nine-months periods ended September 30, 2020 and 2019, other income consists of the following: Three Months Nine Months ended September 30, ended September 30, 2020 2019 2020 2019 Income on borrower charges $ 46,432 $ 130,871 $ 204,964 $ 163,364 Lender, modification and extension fees 154,175 138,148 431,977 288,373 In-house legal fees 53,740 36,500 156,090 108,200 Other income 82,442 20,004 111,040 62,117 Total $ 336,789 $ 325,523 $ 904,071 $ 622,054 |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2020 | |
Commitments and Contingencies | |
Commitments and Contingencies | 9. Commitments and Contingencies Origination Fees Loan origination fees consist of points, generally 2%-5% of the original loan principal. These payments are amortized over the life of the loan for financial statement purposes. Original maturities of deferred revenue are as follows as of: September 30, 2020 $ 332,869 2021 618,867 2022 158,506 2023 4,479 Total $ 1,114,721 In instances in which mortgages are repaid before their maturity date, the balance of any unamortized deferred revenue is recognized in full at the time of repayment. Unfunded Commitments At September 30, 2020, the Company was committed to an additional $13,342,248 in construction loans that can be drawn by the borrower when certain conditions are met. Other In the normal course of its business, the Company is named as a party-defendant because it is a mortgagee having interests in real properties that are being foreclosed upon, usually because the owner failed to pay property taxes. The Company actively monitors these actions and, in all cases, believes there remains sufficient value in the subject property to assure that no loan impairment exists. At September 30, 2020, there were eight such properties, representing approximately $1.3 million in mortgages receivable. |
Related Party Transactions
Related Party Transactions | 9 Months Ended |
Sep. 30, 2020 | |
Related Party Transactions | |
Related Party Transactions | 10. Related Party Transactions In the ordinary course of business, the Company may originate, fund, manage and service loans to shareholders. The underwriting process on these loans is consistent with Company policy. The terms of such loans, including the interest rate, income, origination fees and other closing costs are the same as those applicable to loans made to unrelated third parties in the portfolio. As of September 30, 2020, and 2019, loans to known shareholders totaled $4,626,665 and $5,703,655, respectively. Interest income earned on these mortgage loans for the three- and nine-months ended September 30, 2020 was $129,956 and $397,293, respectively. Interest income earned on these mortgage loans for the three- and nine-months ended September 30, 2019 was $143,061 and $365,784, respectively. For each of the nine-month periods ended September 30, 2020 and 2019, the wife of the Company’s chief executive officer was paid $75,000 for accounting and financial reporting services provided to the Company. |
Concentration of Credit Risk
Concentration of Credit Risk | 9 Months Ended |
Sep. 30, 2020 | |
Concentration of Credit Risk | |
Concentration of Credit Risk | 11. Concentration of Credit Risk Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash, cash equivalents and mortgage loans. The Company maintains its cash and cash equivalents with various financial institutions. Accounts at the financial institutions are insured by the Federal Deposit Insurance Corporation up to $250,000. The Company makes loans that are secured by first mortgage liens on real property located primarily (approximately 90%) in Connecticut. This concentration of credit risk may be affected by changes in economic or other conditions of the geographic area. Credit risks associated with the Company’s mortgage loan portfolio and related interest receivable are described in Note 4 - Mortgages Receivable. |
Equity Financing Transactions
Equity Financing Transactions | 9 Months Ended |
Sep. 30, 2020 | |
Equity Financing Transactions | |
Equity Financing Transactions | 12. Equity Financing Transactions During the nine-month period ended September 30, 2019, the Company generated approximately $32 million of gross proceeds from the sale of its securities as follows: (i) $20,465,203 from the sale of 4,340,456 common shares in an "at-the-market" offerings; (ii) $82,035 from the exercise of 16,407 warrants; and (iii) $11,500,000 from the sale of 2,300,000 common shares. A portion of the net proceeds from these transactions were used to repay, the outstanding balance on a credit facility maintained with Webster Business Credit Corporation, with the balance used as working capital and for general corporate purposes. On January 27, 2020, the Company filed a Registration Statement on Form S-3 with the SEC covering the offering and sale of up to $100 million of its securities, including common shares, preferred shares, debt securities, warrants, guaranties and units consisting of two or more classes of the foregoing securities. The registration statement became effective February 5, 2020. |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2020 | |
Subsequent Events | |
Subsequent Events | 13. Subsequent Events In October 2020, the Company sold an additional $14,000,000 aggregate principal amount of its September 2025 Notes. In connection with the offering of such notes, the Company granted the underwriters an option to purchase up to an additional $2.1 million aggregate principal amount of September 2025 Notes. The option expires November 20, 20120. On November 4, 2020, the Company paid a dividend of $0.12 per share, or $2,654,076 in the aggregate, to shareholders of record as of October 26, 2020. |
COVID-19
COVID-19 | 9 Months Ended |
Sep. 30, 2020 | |
COVID-19 | |
COVID-19 | 14. COVID-19 On March 20, 2020, Governor Ned Lamont of Connecticut issued an executive order requiring all “non-essential” businesses to close effective 8:00 p.m., Monday, March 23, 2020, until further notice. During the second quarter of 2020, the State of Connecticut announced plans to re-open selected businesses pursuant to a three Phase reopening plan for those businesses deemed non-essential and closed due to the March 20, 2020 executive order. On May 20, 2020, Phase 1 of the re-opening plan was put in place, on June 17, 2020 Phase 2 was put into effect and on October 8, 2020 Phase 3 was put into effect. The compliance requirements for certain businesses to operate are difficult to administer, costly and in many situations not customer friendly. If these orders remain in effect for an extended period, it could disrupt the Company’s operations in a material way, resulting in reductions in revenues, net income, and cash flow. In addition, any disruption to the operations of a borrower could impair its ability to make monthly payments of interest, payments of insurance and/or taxes or to repay the outstanding balances on their loans at maturity. Furthermore, if a liquidity crisis were to develop, borrowers may not be able to refinance their loans when due. Finally, the spread of COVID-19 is having a negative impact on the overall economy, including on real estate values. If borrowers cannot sell their properties or the values of properties securing mortgage loans decline significantly, the borrowers may not be able to repay their loans when due. In addition, the filing and preparation of loan documents with the various recording offices may be delayed and currently there is only limited access to the Connecticut court system to process foreclosures and evictions. In the second quarter of 2020, the Company restructured twenty-three loans , having an aggregate balance of $6.5 million at June 30, 2020, pursuant to forbearance requests by borrowers under a program the Company adopted in response to the COVID-19 pandemic. The total amount of interest deferred under these twenty-three loans was approximately $200,000. At September 30, 2020, eighteen forbearance loans, having an aggregate principal balance of $5.1 million and $146,000 of deferred interest, were still outstanding. If there is a re-occurrence of the virus in Connecticut or the State mandates further business closures, the Company may be compelled to take measures to preserve its cash flow, including reducing operating expenses and dividend payments until the consequences of the outbreak subside. There may be other adverse consequences to the Company’s business, operations, and financial condition from the spread of COVID-19 that have not been considered. |
Significant Accounting Polici_2
Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2020 | |
Significant Accounting Policies | |
Unaudited Financial Statements | Unaudited Financial Statements The accompanying unaudited financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) for interim financial information. Accordingly, they do not include all the information and footnotes required by GAAP for complete financial statements. However, in the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Results of operations for the interim periods are not necessarily indicative of the operating results to be attained in the entire fiscal year. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Management’s estimates are based on (a) assumptions that consider the Company’s past experience, (b) projections regarding the Company’s future operations and (c) general financial market and local and general economic conditions. Actual amounts could differ from those estimates. |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers all demand deposits, cashier’s checks, money market accounts and certificates of deposit with an original maturity of three months or less to be cash equivalents. The Company maintains its cash and cash equivalents at various financial institutions. The account balances typically exceed the Federal Deposit Insurance Corporation insurance coverage, and, as a result, there is a concentration of credit risk related to amounts on deposit. The Company does not believe that the risk is significant. |
Allowance for Loan Loss | Allowance for Loan Loss The Company reviews each loan on a quarterly basis and evaluates the borrower’s ability to pay the monthly interest, the borrower’s likelihood of executing the original exit strategy, as well as the loan-to-value (LTV) ratio. Based on the analysis, management determines if any provisions for impairment of loans should be made and whether any loan loss reserves are required. |
Fair Value Measurements | Fair Value Measurements The framework for measuring fair value provides a fair value hierarchy that prioritizes inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy under Financial Accounting Standards Board Accounting Standards Codification (“FASB ASC”) 820 are described as follows: Level 1 Level 2 ● quoted prices for similar assets or liabilities in active markets; ● quoted prices for identical or similar assets or liabilities in inactive markets; ● inputs other than quoted prices that are observable for the asset or liability; and ● inputs that are derived principally from or corroborated by observable market data by correlation or other means. If the asset or liability has a specified (i.e., Level 3 |
Property and Equipment | Property and Equipment Land and building acquired in December 2016 to serve as the Company’s office facilities is stated at cost. The building is being depreciated using the straight-line method over its estimated useful life of 40 years. Expenditures for repairs and maintenance are charged to expense as incurred. The Company relocated its entire operations to this property in March 2019. |
Impairment of long-lived assets | Impairment of long-lived assets The Company continually monitors events or changes in circumstances that could indicate carrying amounts of long-lived assets may not be recoverable. When such events or changes in circumstances occur, the Company assesses the recoverability of long-lived assets by determining whether the carrying value of such assets will be recovered through undiscounted expected future cash flows. If the total of the undiscounted cash flows is less than the carrying amount of these assets, the Company recognizes an impairment loss based on the excess of the carrying amount over the fair market value of the assets. |
Deferred Financing Costs | Deferred Financing Costs Costs incurred by the Company in connection with the public offering of its unsecured, unsubordinated notes, described in Note 6 - Notes Payable -- are being amortized over the term of the respective Notes. |
Revenue Recognition | Revenue Recognition Interest income from the Company's loan portfolio is earned, over the loan period and is calculated using the simple interest method on principal amounts outstanding. Generally, the Company's loans provide for interest to be paid monthly in arrears. The Company does not accrue interest income on mortgages receivable that are more than 90 days past due. Origination fee revenue, generally 2%- 5% of the original loan principal amount, is collected at loan funding and in connection with the extension of loans, and is recognized ratably over the contractual life of the loan in accordance with ASC 310. |
Income Taxes | Income Taxes The Company believes it qualifies as a Real Estate Investment Trust (REIT) for federal income tax purposes and made the election to be taxed as a REIT when it filed its 2017 federal income tax return. As a REIT, the Company is required to distribute at least 90% of its taxable income to its shareholders on an annual basis. The Company’s qualification as a REIT depends on its ability to meet on a continuing basis, through actual investment and operating results, various complex requirements under the Internal Revenue Code of 1986, as amended, relating to, among other things, the sources of its income, the composition and values of its assets, its compliance with the distribution requirements applicable to REITs and the diversity of ownership of its outstanding common shares. So long as it qualifies as a REIT, the Company, generally, will not be subject to U.S. federal income tax on its taxable income distributed to its shareholders. However, if it fails to qualify as a REIT in any taxable year and does not qualify for certain statutory relief provisions, it will be subject to U.S. federal income tax at regular corporate rates and may also be subject to various penalties and may be precluded from re-electing REIT status for the four taxable years following the year during in which it lost its REIT qualification. The Company follows the provisions of FASB ASC Topic 740-10 “Accounting for Uncertainty in Income Taxes”, which prescribes a recognition threshold and measurement attribute for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return and disclosure required. Under this standard, an entity may only recognize or continue to recognize tax positions that meet a “more likely than not” threshold. Should the Company become liable for interest and penalties related to unrecognized tax benefits, such amounts would be included in interest expense. The Company has determined that there are no uncertain tax positions requiring accrual or disclosure in the accompanying financial statements as of September 30, 2020. |
Earnings Per Share | Earnings Per Share Basic and diluted earnings per share are calculated in accordance with FASB ASC 260 “Earnings Per Share”. Under ASC 260, basic earnings per share is computed by dividing income available to common shareholders by the weighted-average number of common shares outstanding for the period. The computation of diluted earnings per share is similar to basic earnings per share, except that the denominator is increased to include the potential dilution from the exercise of stock options and warrants for common shares using the treasury stock method. The numerator in calculating both basic and diluted earnings per common share for each period is the reported net income. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In May 2019, the FASB issued Accounting Standards Update (“ASU”) 2019-05, “Financial Instruments—Credit Losses (Topic 326): Targeted Transition Relief," which requires that entities use a new forward looking "expected loss" model that generally will result in the earlier recognition of an allowance for credit losses. This ASU allows entities to irrevocably elect the fair value option for certain financial assets previously measured at amortized cost upon adoption of ASU 2016-13, “Measurement of Credit Losses on Financial Instruments.” The Company adopted both ASU 2016-13 and ASU 2019-05 effective January 1, 2020. The adoption of this guidance did not have a material impact on the Company’s financial statements. Management does not believe that any other recently issued, but not yet effective, accounting standards if currently adopted would have a material effect on the Company’s financial statements. |
Reclassifications | Reclassifications Certain 2019 account balances have been reclassified to conform with the current year’s presentation. |
Fair Value Measurement (Tables)
Fair Value Measurement (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Fair Value Measurement | |
Summary of company's assets at fair value | The following table sets forth by Level, within the fair value hierarchy, the Company’s assets at fair value as of September 30, 2020: Level 1 Level 2 Level 3 Total Stocks and ETFs $ 1,332,540 — — $ 1,332,540 Fixed and Preferred Securities $ 2,862,830 — — $ 2,862,830 Mutual Funds $ 23,493,424 — — $ 23,493,424 Total Investments $ 27,688,794 — — $ 27,688,794 Real Estate Owned $ 7,523,584 $ 7,523,584 |
Mortgages Receivable (Tables)
Mortgages Receivable (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Mortgages Receivable | |
Schedule of credit risk profile | Credit risk profile based on loan activity as of September 30, 2020 and December 31, 2019: Total Outstanding Mortgages Receivable Residential Commercial Land Mixed Use Mortgages September 30, 2020 $ 83,885,131 $ 29,316,495 $ 7,222,077 $ 3,708,176 $ 124,131,879 December 31, 2019 $ 71,605,920 $ 16,122,990 $ 5,639,979 $ 979,800 $ 94,348,689 |
Schedule of maturities of mortgage loans receivable | The following are the maturities of mortgages receivable as of September 30: 2020 $ 40,472,468 2021 68,804,366 2022 12,471,850 2023 2,383,195 Total $ 124,131,879 |
Other income (Tables)
Other income (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Other income | |
Schedule of other income | For the three-month and nine-months periods ended September 30, 2020 and 2019, other income consists of the following: Three Months Nine Months ended September 30, ended September 30, 2020 2019 2020 2019 Income on borrower charges $ 46,432 $ 130,871 $ 204,964 $ 163,364 Lender, modification and extension fees 154,175 138,148 431,977 288,373 In-house legal fees 53,740 36,500 156,090 108,200 Other income 82,442 20,004 111,040 62,117 Total $ 336,789 $ 325,523 $ 904,071 $ 622,054 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Commitments and Contingencies | |
Schedule of original maturities of deferred revenue | Original maturities of deferred revenue are as follows as of: September 30, 2020 $ 332,869 2021 618,867 2022 158,506 2023 4,479 Total $ 1,114,721 |
The Company (Details)
The Company (Details) | 9 Months Ended |
Sep. 30, 2020 | |
Minimum [Member] | |
Debt term (in years) | 1 year |
Maximum [Member] | |
Debt term (in years) | 3 years |
Significant Accounting Polici_3
Significant Accounting Policies (Details) | 9 Months Ended |
Sep. 30, 2020USD ($) | |
Uncertain tax positions | $ 0 |
Land and Building [Member] | |
Property, Plant and Equipment, Useful Life | 40 years |
Minimum [Member] | |
Origination fee revenue as a percentage of original loan principal amount | 2.00% |
Maximum [Member] | |
Origination fee revenue as a percentage of original loan principal amount | 5.00% |
Fair Value Measurement (Details
Fair Value Measurement (Details) | Sep. 30, 2020USD ($) |
Fair Value Measurement | |
Stocks and ETF's | $ 1,332,540 |
Fixed and Preferred Securities | 2,862,830 |
Mutual Funds | 23,493,424 |
Total Investments | 27,688,794 |
Real Estate Owned | 7,523,584 |
Level 1 | |
Fair Value Measurement | |
Stocks and ETF's | 1,332,540 |
Fixed and Preferred Securities | 2,862,830 |
Mutual Funds | 23,493,424 |
Total Investments | 27,688,794 |
Level 2 | |
Fair Value Measurement | |
Stocks and ETF's | 0 |
Fixed and Preferred Securities | 0 |
Mutual Funds | 0 |
Total Investments | 0 |
Level 3 | |
Fair Value Measurement | |
Stocks and ETF's | 0 |
Fixed and Preferred Securities | 0 |
Mutual Funds | 0 |
Total Investments | 0 |
Real Estate Owned | $ 7,523,584 |
Mortgages Receivable (Details)
Mortgages Receivable (Details) - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 |
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate | $ 124,131,879 | $ 94,348,689 |
Land [Member] | ||
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate | 7,222,077 | 5,639,979 |
Residential Mortgage [Member] | ||
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate | 83,885,131 | 71,605,920 |
Commercial Loan [Member] | ||
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate | 29,316,495 | 16,122,990 |
Mixed Use [Member] | ||
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate | $ 3,708,176 | $ 979,800 |
Mortgages Receivable - Maturiti
Mortgages Receivable - Maturities of mortgage loans (Details) - USD ($) | Sep. 30, 2020 | Dec. 31, 2019 |
Mortgages Receivable | ||
2020 | $ 40,472,468 | |
2021 | 68,804,366 | |
2022 | 12,471,850 | |
2023 | 2,383,195 | |
Total | $ 124,131,879 | $ 94,348,689 |
Mortgages Receivable - Addition
Mortgages Receivable - Additional information (Details) | 9 Months Ended | |||
Sep. 30, 2020USD ($)loan | Sep. 30, 2019USD ($) | Jun. 30, 2020USD ($)loan | Dec. 31, 2019USD ($) | |
Mortgage Loans on Real Estate, Default Interest Rate | 18.00% | |||
Payments to Acquire Mortgage Receivable | $ 68,029,798 | $ 42,163,704 | ||
Proceeds from Collection of Mortgages Receivable | 37,859,270 | 27,917,331 | ||
Mortgages receivable | $ 124,131,879 | $ 94,348,689 | ||
Mortgage loan portfolio number of loans | loan | 480 | |||
Mortgage loan portfolio number of loans in process of foreclosure | loan | 14 | |||
Number of COVID-19 forbearance requests | loan | 18 | 23 | ||
Mortgages receivable for COVID-19 forbearance requests | $ 5,100,000 | $ 6,500,000 | ||
Deferred interest | $ 146,000 | $ 200,000 | ||
Modification of borrower's loan period | 90 days | |||
Mortgage Concentration Risk [Member] | ||||
Concentration Risk, Percentage | 10.00% | |||
Mortgages [Member] | ||||
Payments to Acquire Mortgage Receivable | $ 68,029,798 | $ 42,163,704 | ||
Minimum [Member] | ||||
Debt term (in years) | 1 year | |||
Interest rate (as a percent) | 5.00% | |||
Maximum [Member] | ||||
Debt term (in years) | 3 years | |||
Mortgage Loans on Real Estate, Face Amount of Mortgages | $ 3,200,000 | |||
Interest rate (as a percent) | 13.00% | |||
Fourteen Mortgage Loans [Member] | ||||
Mortgages receivable | $ 4,000,000 |
Real Estate Owned - Additional
Real Estate Owned - Additional information (Details) - USD ($) | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | |
Real Estate Owned | |||
Real Estate Investment Property, at Cost | $ 7,523,584 | $ 8,258,082 | |
Rental Properties | 1,478,854 | ||
Real Estate Held-for-sale | 6,044,730 | ||
Impairment loss on real estate owned | $ 495,000 | $ 0 |
Notes Payable (Details)
Notes Payable (Details) | 9 Months Ended | |||
Sep. 30, 2020USD ($)loan | Dec. 31, 2019USD ($) | Nov. 30, 2019USD ($) | Jun. 30, 2019USD ($) | |
Number of unsecured unsubordinated notes | loan | 3 | |||
Outstanding principal balance | $ 72,526,750 | |||
Aggregate amount outstanding | $ 69,452,636 | $ 55,475,810 | ||
Threshold percentage of taxable income to prohibit distribution | 90.00% | |||
Threshold asset coverage ratio | 150.00% | |||
Period of written notice to redeem notes without premium or penalty | 30 days | |||
Debt Issuance Costs, Net | $ 3,074,115 | 2,687,190 | ||
Unsecured subordinated notes | ||||
Debt Issuance Costs, Net | 3,600,000 | $ 2,700,000 | ||
June 2024 Notes | ||||
Aggregate Principal amount issued | $ 23,663,000 | |||
Interest rate | 7.125% | |||
December 2024 Notes | ||||
Aggregate Principal amount issued | $ 34,500,000 | |||
Interest rate | 6.875% | |||
September 2025 Notes | ||||
Aggregate Principal amount issued | $ 14,363,750 | |||
Interest rate | 7.75% |
Line of Credit (Details)
Line of Credit (Details) - USD ($) | Sep. 30, 2020 | Sep. 30, 2020 | Dec. 31, 2019 |
Line of Credit Facility [Line Items] | |||
Long-term Line of Credit | $ 12,080,569 | $ 12,080,569 | $ 0 |
Credit line from Wells Fargo | |||
Line of Credit Facility [Line Items] | |||
Long-term Line of Credit | $ 12,100,000 | $ 12,100,000 | |
Interest rate (as a percent) | 1.75% | 1.50% |
Other income (Details)
Other income (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Other income | ||||
Income on borrower charges | $ 46,432 | $ 130,871 | $ 204,964 | $ 163,364 |
Lender, modification and extension fees | 154,175 | 138,148 | 431,977 | 288,373 |
In-house legal fees | 53,740 | 36,500 | 156,090 | 108,200 |
Other income | 82,442 | 20,004 | 111,040 | 62,117 |
Total | $ 336,789 | $ 325,523 | $ 904,071 | $ 622,054 |
Commitments and Contingencies -
Commitments and Contingencies - Original maturities of deferred revenue (Details) - Deferred Lease Revenue [Member] | Sep. 30, 2020USD ($) |
Other Commitments [Line Items] | |
2020 | $ 332,869 |
2021 | 618,867 |
2022 | 158,506 |
2023 | 4,479 |
Total | $ 1,114,721 |
Commitments and Contingencies_2
Commitments and Contingencies - Additional Information (Details) | 9 Months Ended |
Sep. 30, 2020USD ($)property | |
Number of Mortgage Properties | property | 8 |
Mortgages receivable | $ 1,300,000 |
Unfunded Loan Commitment [Member] | |
Other Commitment | $ 13,342,248 |
Minimum [Member] | |
Loan Origination Fees On Original Loan Principal, Percentage | 2.00% |
Maximum [Member] | |
Loan Origination Fees On Original Loan Principal, Percentage | 5.00% |
Related Party Transactions (Det
Related Party Transactions (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Shareholders [Member] | ||||
Related Party Transaction [Line Items] | ||||
Loans and Leases Receivable, Related Parties | $ 4,626,665 | $ 5,703,655 | $ 4,626,665 | $ 5,703,655 |
Interest Income, Related Party | $ 129,956 | $ 143,061 | 397,293 | 365,784 |
Wife of Executive Officer [Member] | Accounting and Financial Services [Member] | ||||
Related Party Transaction [Line Items] | ||||
Related Party Transaction, Expenses from Transactions with Related Party | $ 75,000 | $ 75,000 |
Concentration of Credit Risk (D
Concentration of Credit Risk (Details) - Credit Concentration Risk [Member] | 9 Months Ended |
Sep. 30, 2020USD ($) | |
Concentration Risk [Line Items] | |
Concentration Risk, Percentage | 90.00% |
Cash and cash equivalents insured by the Federal Deposit Insurance Corporation | $ 250,000 |
Equity Financing Transactions (
Equity Financing Transactions (Details) - USD ($) | Jan. 27, 2020 | Sep. 30, 2019 | Sep. 30, 2019 |
Gross proceeds from sale of securities | $ 32,000,000 | ||
Maximum [Member] | |||
Gross proceeds from sale of securities | $ 100,000,000 | ||
Common Shares | |||
Gross Proceeds From Issuance Of Common Stock | $ 11,500,000 | ||
Sale of common stock | 2,300,000 | 2,300,000 | |
Warrants | |||
Proceeds from Warrant Exercises | $ 82,035 | ||
Number of warrants exercised | 16,407 | 16,407 | |
ATM | Common Shares | |||
Gross Proceeds From Issuance Of Common Stock | $ 20,465,203 | ||
Sale of common stock | 866,332 |
Subsequent Events (Details)
Subsequent Events (Details) - USD ($) | Nov. 04, 2020 | Sep. 30, 2020 | Sep. 30, 2019 | Oct. 31, 2020 |
Subsequent Event [Line Items] | ||||
Payments of Ordinary Dividends | $ 5,308,152 | $ 7,027,746 | ||
September 2025 Notes | ||||
Subsequent Event [Line Items] | ||||
Aggregate Principal amount issued | $ 14,363,750 | |||
Subsequent Events [Member] | ||||
Subsequent Event [Line Items] | ||||
Dividend paid (in dollars per share) | $ 0.12 | |||
Payments of Ordinary Dividends | $ 2,654,076 | |||
Subsequent Events [Member] | September 2025 Notes | ||||
Subsequent Event [Line Items] | ||||
Aggregate Principal amount issued | $ 14,000,000 | |||
Maximum borrowing capacity | $ 2,100,000 |
COVID-19 (Details)
COVID-19 (Details) | Sep. 30, 2020USD ($)loan | Jun. 30, 2020USD ($)loan |
COVID-19 | ||
Number of COVID-19 forbearance requests | loan | 18 | 23 |
Mortgages receivable for COVID-19 forbearance requests | $ 5,100,000 | $ 6,500,000 |
Deferred interest | $ 146,000 | $ 200,000 |