PRIVATE CLIENT NEWSLETTER

You are receiving this letter because you are either a high-net-worth client of Blackburne & Sons Realty Capital Corporation (since 1980) or you once applied for a commercial real estate loan of $1 million or more using C-Loans.com or CommercialMortgage.com. Blackburne & Sons and C-Loans, Inc. are sister companies.

Last month we tried to syndicate the all-cash purchase of a beautiful little apartment building within walking distance of the capitol of California. The offering failed! Our investors wanted a higher cap rate. Were they right? We also have lots of cute, clean jokes, some funny pics, and a hilarious video of a little Jack Russell Terrier. Removal Instructions are below.

Joke Du Jour

While riding my Harley, I swerved to avoid hitting a deer. I lost control and landed in a ditch, severely banging my head. Dazed and confused, I crawled out of the ditch to the edge of the road. A shiny new convertible pulled up. The driver was a very beautiful woman, and she asked, "Are you okay?” As I looked up, I noticed she was wearing a low cut blouse with some quite alluring cleavage.

"I'm okay, I think," I replied, as I pulled myself up to the side of the car to get a closer look. She said, “Get in, and I’ll take you home so I can clean and bandage that nasty scrape on your head.” "That's nice of you," I answered, "but I don't think my wife will like me doing that!” "Oh, come now, I’m a nurse," she insisted. "I need to see if you have any more scrapes and then treat them properly.” Well, she was quite pretty and very persuasive. Being sort of shaken and weak, I agreed, but repeated, "I'm sure my wife won't like this.”

We arrived at her place, which was just few miles away, and after a couple of cold beers and the bandaging, I thanked her, saying, "I feel a lot better, but I know my wife is going to be really upset, so I'd better go now.” "Don't be silly!" she said with a smile, while unbuttoning her blouse. "Stay for a while. She won't know anything. By the way, where is she?”

Guiltily, I was forced to confess, "Still in the ditch with my Harley, I guess.”

The Police Would Beat the Tar Out of You - and Chuckle Later

Remember, You Want To Stick Like Glue To Blackburne & Sons:

We are a very rare breed of animal. We are old-time syndicators. I explain more in the final section of this newsletter.

First Words Joke

My son crawled for the first time while I was away on exercises. I also missed Harry's first steps and was afraid an upcoming course would cause me to miss his first words. Each day, I called home and asked if he had spoken yet. The answer was always, “No," until my wife said Harry had something to say to me. "Daddy, daddy," I heard over the phone and glowed with pride. My wife came back on the line and said, "You should come home as soon as possible.” "Why?" I asked. "Harry was speaking to the dog.”

A High Cap Rate is a Sign of a Crumby Deal

First let’s remind you of the definition of a cap rate. The cap rate is simply the return on your money that you would earn if you bought an income property for all cash. The higher the cap rate, the better the real estate investment, right? After all, you earn a higher return on your investment, right?

Wrong! Apartment buildings in the ‘hood sell for whopping 11% to 12% cap rates. Are they good investments? How would you like to collect the rents in a low-income, high-drug-use area? You’d be lucky not to get shot. That’s why you must always be very careful whenever you see property with a high cap rate. There is danger there.

A high cap rate is a warning of another danger too - the presence of excess land nearby. The problem with vacant land nearby is that the moment rents start to increase, some developer will jump in and build a competing (apartment) building. With more (apartment) units available, rents will fall. There is little chance of significant appreciation if you buy real estate where there is lots of vacant land nearby. We see this a lot in the Midwest. Cisca and I bought our home in Plymouth, Indiana for $279,000 and sold it 18 years later for just $320,000. Why? Plymouth is surrounded by corn fields.

Your return on a real estate investment consists of two main components - cash flow and appreciation. The problem with buying high-cap-rate income property is that the rents seldom go up very much, and with no increase in net income, the property value does not appreciate very much.

On the other hand, when you buy low-cap-rate property, you are buying a property that everyone wants to own. It’s lustful property. When you drive by, you “lust in your heart” (Jimmy Carter) to own it. The area will almost always be very safe, and there will be virtually no vacant land nearby where a developer could build a competing building. The rents will go up every year, and the rental income will compound. Let’s suppose rents are going up 3% per year, and they start at $2,000 per month per apartment. That’s $2,060 at the end of year one, $2,122 at the end on year two, and so on. As the Rent Roll increases, so will the value of the property.

Remember, on the outer edges of a big city where there is vacant land, in the Midwest, and in the ‘hood, you don’t get this type of rental and property value appreciation.

And let’s talk about the quality of your income. Quality of income refers to the likelihood that you are going to be paid. If you own rental units on the outskirts of some big city during a recession, you’re likely to suffer some serious and lingering vacancy problems. Contrast this with a small apartment within walking distance of the financial district, and you’ll see that the units are unlikely to stay vacant for very long.

Lastly, let’s talk about the quality of your tenants. How can you make any money when the tenants so trash your apartment units that it takes $4,000 to repair the damage in each unit. Compare the likely condition of the property if your exiting tenant was a young banker or attorney. Yeah, you may be earning a high cap rate, but your Vacancy and Collection Loss will be huge, as will your Repairs and Maintenance expense.

Folks, you make far more money in commercial real estate when you “over-pay” for prime-prime property. I cried when our syndication failed this month. [Sob] Here is the deal where we could not raise quite enough money. Please let Angela know if my words of wisdom today perhaps swayed your opinion. I loved this deal!

C’mon, We Only Live Once. Have Some Fun With It.

Download Your Free Guide, "How To Find Houses To Flip"

Download your free guide here.

Bathing Joke

“People often say that motivation doesn't last. Well, neither does bathing - that's why we recommend it daily.” — Zig Ziglar

Need a Commercial Real Estate Loan?

C-Loans.com is a commercial mortgage portal. It will take you just four minutes to complete your mini-app. Then C-Loans will sort through its databank of 750 commercial lenders and produce for you a custom-generated Suggested Lender List containing twenty to thirty lenders who are perfect for your particular deal. You put a check mark next to six lenders and then press, "Submit." Within minutes hungry commercial lenders will be contacting you with offers.

Golf Shoes Joke

Jack decided to tie the knot with his longtime girlfriend. One evening, after the honeymoon, he was cleaning his golf shoes; his wife was standing there watching him. After a long period of silence she finally speaks. "Honey, I've been thinking, now that we are married I think it's time you quit golfing. Maybe you should just sell your golf clubs."

Jack gets this horrified look on his face. She says, "Darling, what's wrong? And Jack says, "There for a minute, you were sounding like my ex-wife." "Ex-wife!" she screams, "I didn't know you were married before!" And Jack replies, "I wasn't."

Invest in 7% to 12% First Mortgages

You probably have money set aside for your retirement and for the cost of college for your children and grandchildren. It shouldn't all be invested in the stock market.

In California, the first trust deed investment business is huge. A recent law change - the JOBS Act - now allows accredited investors nationwide to also invest in these same first trust deeds and first mortgages. Click here for more information.

Married Jesus Joke

"A controversial 1,200-year-old document has been found that shows evidence that Jesus was married. I don't believe it. What married guy gets to spend all his free time with his 12 buddies?” — Conan O'Brien

If You Cannot Find the Perfect Commercial Lender on C-Loans, Then Try Our Second Portal

We actually own another commercial mortgage portal, CommercialMortgage.com ("CMDC"). I paid $100,000 just for that domain name. Ouch. Actually it was very worth it.

Anyway, CMDC is a much easier and faster commercial mortgage portal than C-Loans. In addition, CMDC enjoys over 3,000 different commercial lenders. So why shouldn't you just always use CommercialMortgage.com?

Unlike CMDC, C-Loans.com actually allows you to submit your commercial loan to dozens and dozens of commercial lenders, six lenders at a time. But if C-Loans doesn't produce just the right lender, then you should move on to CommercialMortgage.com.

And best of all, both our our commercial mortgage portals are 100% free.

Why Does This Story Sound Familiar?

Overworked Joke

A priest had the weight of the world on his shoulders and was showing the effects. The church sent him to a psychiatrist, who ordered him to take a week off. So the priest left his religious paraphernalia behind him and went to a neighboring city. He got himself a nice room and went to the hotel bar to relax with a couple stiff drinks.

A waitress in a short skirt and low-cut uniform came over and asked, "What'll it be, Father?” The priest felt to see if he was still wearing his collar by mistake, but he had none on. "How did you know I'm a priest?" he asked. The waitress said, "I'm Sister Mary Margaret. We go to the same psychiatrist!” ."

Want to Speak With a Loan Officer From Blackburne & Sons?

Blackburne & Sons, our private money commercial lending company, continues to seek slightly-flawed first mortgages between $100,000 to $3.5 million on standing commercial properties nationwide.

To apply for a private money commercial loan from Blackburne & Sons, please find your favorite loan officer below:

George Blackburne IV: 916-338-3232 Ext. 314
To apply to George IV online, please click here.

Tom Blackburne: 574-210-6686
To apply to Tom online, please click here.

Alicia Gandy (Loan Goddess): 916-338-3232 Ext. 310
To apply to Alicia online, please click here.

Michael Young: 916-338-3232 Ext. 312
To apply to Mike online, please click here.

Wood Pecker Joke

Q: What do you call a woodpecker with no beak?

A: A headbanger.

Invest in 7% to 12% First Mortgages

I strongly urge you to get on our email list of private mortgage investors. We sell exclusively by email, and we have been selling such investments for over 30 years. Click here for more information.

Casino Joke

There is a very easy way to return from a casino with a small fortune - go there with a large one. -- Jack Yelton

Here is Why You Want to Stay Close to Blackburne & Sons:

Founded in 1980, Blackburne & Sons is an old-time syndicator. There are very few of us left. The Tax Reform Act of 1986 pretty much nuked the whole syndication industry off the face of the Earth. Because you know a syndicator, you now have access to some special money.

If you need a fix and flip loan, a buy-to-rent loan, a bridge loan, or even a permanent loan on, say, your single-wide trailer park in Georgia, we'll make you a private money loan. We've been syndicating hard money loans for 37 years.

If you have some dough set aside for your kid's college, and you want to be extra careful with it, we'll put you into a first trust deed investment (6% to 9% yields) on, say, a nice 8-unit apartment building in San Jose, California.

Let's suppose you are richer than Crassus, and you want to speculate in 11% and 12% first trust deeds. We've got them.

Do you find yields of even 11% to 12% too tame? Want a chance to earn 16% or 17%? We put together syndicates to make preferred equity investments.

Are you a wise investor? We put together syndicates to buy investment properties for all cash. (This strategy has my strongest recommendation.) Because you would own the property free and clear, you should be able to weather just about any recession. Right now we are buying industrial buildings close to downtowns in big California cities.

We have not yet raised equity capital for a developer, but if someone brought us a development deal on a small, multi-tenant industrial building located within a mile of downtown of a large California city, we would definitely take a look at it.

Do you own any first mortgage notes? Want to sell a note at a discount? Better yet, why not simply borrow against it? This is called a hypothecation, and we do 'em.

Please be very wise and play close attention to the following:

Because every loan we make is a new syndicate (as opposed to a fund investment), Blackburne & Sons is always in the market.

When the stock market has fallen by 40%, when real estate values are falling like a knife, and when your own bank is too terrified to lend you a dime, Blackburne & Sons always has a group of savvy investors willing to lend - admittedly at a price - when blood is running in the streets. We are one of a tiny handful of lenders who remained in the market, making loans, every single day of the Great Recession.

So stick close to us. Syndicators are pretty rare, and now you know one.

Dragons Joke

Q: Why do dragons sleep during the day?

A: So they can fight knights!

Video - Jack Russell Terrier Goes All Jack

We had a Jack Russell named Jack. He drove us crazy, but we have never loved any dog more.

Sweet Apartment Loan Program for "A” Deals

You're probably used to thinking of Blackburne & Sons as a subprime commercial lender, but since our acquisition of CommercialMortgage.com (I paid more than a house), some of the nation's largest commercial mortgage investors are giving us wonderful opportunities. Please be sure to check out our great new apartment program.

To apply for an apartment loan from Blackburne & Sons, please find your favorite loan officer below:

George Blackburne IV: 916-338-3232 Ext. 314
To apply to George IV online, please click here.

Tom Blackburne: 574-210-6686
To apply to Tom online, please click here.

Alicia Gandy (Loan Goddess): 916-338-3232 Ext. 310
To apply to Alicia online, please click here.

Michael Young: 916-338-3232 Ext. 312
To apply to Mike online, please click here.

Football Stadium Designers Apparently Like Line Dancing

Final Funny

A thief and his girlfriend were walking down Main Street when she spotted a beautiful diamond ring in a jewelry store window. "Wow, I'd sure love to have that!" she said. "No problem, baby," the thief says, throwing a brick through the glass and grabbing the ring.

A few blocks later, his girlfriend was admiring a leather jacket in another shop window. "What I would give to own that!" she said. "Sure thing, darling," the guy says again, throwing another brick through the window and snatching the coat.

Finally, turning for home, they pass a Mercedes car dealership. "Boy, I would do anything for one of those!" she said to her boyfriend. "Forget that!" the guy moans. "Do you think I'm made of bricks or something?”