Mercer Road Commercial

Blackburne & Sons is pleased to present this first mortgage secured by a 12,216SF restaurant, bar, and banquet hall on a 4.801-acre parcel, located in Greenville, Pennsylvania.

The borrower purchased this property for $180,000 cash, plus an additional auction premium of $18,000 on November 2, 2021. The property is currently free and clear of any liens. The purpose of our loan will be to complete approximately $61,600 in rennovations and the remaining balance will be cash out. We will not be holding back funds for the rennovations.

COUNTY INFORMATION

Mercer County is located in Pennsylvania and is included in the Youngstown-Warren-Boardman, OH-PA Metropolitan Statistical Area. The county is located along the beautiful and historic Shenango River, which provides an abundance of opportunities for watercraft and family activities. Within an hour’s drive from the cities of Pittsburgh, Erie and Youngstown, Greenville is home to Thiel College, a long-established institution of higher education founded upon the Lutheran Church, and St.

As of the 2020 census, the population was 110,652. Its county seat is Mercer, and its largest city is Hermitage. In the 2000 census, there were 120,293 people, 46,712 households, and 32,371 families residing in the county. The population density was 179 people per square mile and there were 49,859 housing units at an average density of 74 per square mile. According to the U.S. Census Bureau, the county has a total area of 683 square miles, of which 673 square miles is land and 10 square miles (1.5%) is water. The county is home to Grove City College and the largest employers in this county are Walmart and the PA State Government.

CITY INFORMATION

Greenville is a borough located along the Shenango River and lies roughly 80 miles from both Pittsburgh and Cleveland. It is 1.89 square miles in area, and had a population of 5,272 in the 2019 U.S. census. Incorporated as the Borough of West Greenville in 1836, it changed its name to the Borough of Greenville in 1865 and began to operate under a home rule charter on January 1, 2020, under the name of the "Town of Greenville." Greenville is also a part of the Youngstown-Warren-Boardman, OH-PA Metropolitan Statistical Area.

In 2019, the median property value in Greenville, PA was $73,700, and the homeownership rate was 53.9%. The economy of Greenville employs 2.39k people. The largest industries are Health Care & Social Assistance (533 people), Manufacturing (359 people), and Educational Services (271 people). The highest paying industries are Transportation, Warehousing, & Utilities ($53,147), Public Administration ($48,419), and Construction ($44,479). The city is home to the Werner Company, the world's largest manufacturer of step and extension ladders. Other national companies based in Greenville include Bail USA and Athena Study Abroad. A prominent regional bus company based in Greenville is Anderson Coach & Travel.

SUBJECT PROPERTY DETAILS

The subject property is located off of Mercer Road and has a total of 4.801-useable acres. The parcel is irregular in shape and generally level in topography. The utilities included are Well, Septic, Electric and Gas. Property is loacted ina Flood Zone X, while flood insuarnce is offered it is not required. It is zoned under a Mixed-Use district (B) and the permitted uses include a variety of residential, office, commercial and limited industrial uses. The subject formerly operated in conjunction with the adjoining Greens of Greenville golf course. The course is now closed and the subject was sold independently and new ownership has indicated that the property will not reopen as a golf course.

This property has been improved with a two-story, 12,216SF banquet hall / bar / restaurant building which was built in the 1970’s and has a remaining economic life of 25 years. The improvement has a concrete foundation and masonry wood framing augmented with brick and vinyl siding. The interior floors include tile, carpet and vinyl plank with acoustic tile and drywall ceilings. The HVAC system includes 3 pad-mounted and 1 roof mounted unit.

The entry level of this property contains 5,728SF of gross building area consisting of a foyer/reception area, a restaurant style dining area, a commercial grade kitchen, a bar area and two restrooms. The upper level contains 760SF of gross building area consisting of two offices and one storage room. This area is accessed via internal staircase. The lower level contains 5,728SF of gross building area consisting of a bar/dining area, multiple storage rooms, multiple office rooms, three restrooms, a walk-in freezer/cooler and a mechanical room. Access to this level is provided via internal staircase as well as a man door on the rear patio. Additional site improvements include lined, asphalt-paved parking, stone-paved walkways and pads, patio lighting, signage and professional landscaping.There are two parking lots with access from Mercer Road; however, 50.0% of the spaces for one of the lots are situated on an adjoining parcel. Additional parking could be accommodated on site if necessary.

The borrower plans on spending approximately $61,600 from the cash out on rehabbing the property. Those renovations include paint, landscaping, carpet, stain, adding a patio extension, additional parking, dumpster, plumbing and energy efficient windows. We will not be holding back funds for these renovations. The property is currently vacant, and the borrower plans to either lease out this space for events such as weddings, parties, etc. or eventually sell the property.

BORROWER SUMMARY

The guarantor is a single man who will hold title through an LLC, of which he is 100% owner. The entity was formed in February of 2020 and reports its income through the borrower’s personal taxes. Our borrower works as a squad leader for the United States Army from 2010 until present. Additionally, he owns a few other rental properties for which he makes a passive income.

He reports a net worth of $982,910 and has mid-credit score of 789. He reported $75,633 in adjusted gross income in 2020 and $62,901 in adjusted gross income for 2019.

VALUATION SUMMARY

We hired a local MAI appraiser who valued this property with an AS-IS appraised value of $520,000.

Due to state regulations in Pennsylvania, we were unable to obtain a Broker's Price Opinion (BPO) for this property.

At a 7.0% yield to the investors and a 22.5% LTV (AS-IS) Appraised Value this appears to be a reasonable investment. Investing in any first trust deed involves substantial risk, so be sure to read the Risk Factors section of the Offering Circular carefully before investing. A large and prolonged decline in real estate values is possible. Foreclosed commercial properties almost always need to be renovated before they can be leased or sold, so be sure to maintain some liquidity.

You should spread your mortgage investment portfolio out among lots of different deals. If you have $300,000 to invest, you should invest $10,000 to $20,000 in 15 to 20 different fractionalized first trust deeds. For example, if the deal is a $300,000 first trust deed on an office building in Boise, with a $15,000 investment you would own 5% of the loan. By spreading your money out into a bunch of different deals, you are achieving the diversity of a fund without the failed fund sponsor problem. If you are extremely wealthy, you could double (or even triple) my suggested investment amounts, but be careful about pouring too much money into a single deal. We once had a whole building fall into an old coal mine. Ouch.
Be wise and resist investing in any first trust deed yielding more than 9%. I would personally never invest in a first trust deed with a double-digit yield. The payments slowly grind the borrowers into the dust.
Blackburne’s Law theorizes that a portfolio of 8% and 9% first trust deeds will outperform a portfolio of 11% and 12% first trust deeds over a seven-year term. Only our wisest (and eventually the happiest) investors listen to me.
You can also buy some of our smaller deals in their entirety, but I only recommend this if you are richer than Crassus.
It is very easy to lose money in hard money first mortgages, so fight-fight-fight against the temptation to invest in high-yield deals. As Nancy Reagan used to say, “Just say no.” But if you choose 7% to 9% first mortgages, I predict that you will be very, very pleased.
During the S&L Crisis, commercial real estate fell by 45%. Within three years, values reached new highs. During the Dot-Com Meltdown, commercial real estate fell by 45%. Within three years, values reached new highs. During the Great Recession, commercial real estate fell by 45%. Within three years, values reached new highs. Some time in the next decade, we will have another opportunity to snatch up prime commercial real estate at a huge discount. You will be terrified, but when Blackburne and Sons invites you to join a syndicate to buy a nice commercial property at a 35% discount off its prior high, just remember that the best time to invest is when blood is running in the streets. Why not when real estate has fallen by 45%? You’ll never catch the very bottom because historically the bounces off the bottom happen much too fast. Bounce-soar. You will be terrified, but just remember that the best time to invest is when blood is running in the streets.

Blackburne & Sons Realty Capital Corporation--For more information, contact George Blackburne, IV
555 University Ave., Suite 150, Sacramento, CA 95825
Telephone: (916) 338-3232 * Fax: (916) 338-2328
Real Estate Broker -- California Bureau of Real Estate -- License Number 829677 -- NMLS Number 103430
Publicly advertised to California residents only under California Department of Business Oversight business plan permit.
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