Queen Creek Auto Repair

Blackburne & Sons is pleased to present this purchase money first mortgage secured by a 5,500SF auto-repair facility on a 30,190SF parcel located in Queen Creek, Maricopa County, Arizona.

Our borrower has been a tenant of the subject property since 2008, and is in contract to purchase the property for $1,300,000. Our loan will be used to complete the purchase.

Maricopa County is in the south-central part of the State of Arizona. The county is the central county of the Phoenix-Mesa-Chandler, AZ Metropolitan Statistical Area. According to the U.S. Census Bureau, the county has a total area of 9,224 sq mi of which 24 sq mi (0.3%) are covered by water. Maricopa County is one of the largest counties in the United States by area, with a land area greater than that of four other U.S. states. It is by far Arizona’s most populous county, encompassing well over half of the state’s residents. Per the 2020 census, the county has over $4.4M million residents.

Maricopa Country was named after the Maricopa Native Americans. Five Native American Reservations are located in the county. The largest Native American Reservations are Salt River Pima-Maricopa Indian Community and the Gila River Indian Community.

Maricopa County is home to the three largest universities in Arizona, University of Phoenix-Arizona (28,103 degrees awarded in 2020), Grand Canyon University (25,921 degrees), and Arizona State University (21,026 degrees).

Per Data USA, the economy of Maricopa County, AZ employs 2.19M people. The largest industries in Maricopa County, AZ are Health Care & Social Assistance (270,974 people), Retail Trade (261,644 people), and Educational Services (179,728 people), and the highest paying industries are Utilities ($76,920), Professional, Scientific, & Technical Services ($61,766), and Mining, Quarrying, and Oil & Gas Extraction ($61,226).

Pinal County was carved out of neighboring Maricopa County and Pima County on February 1, 1875, during the Eighth Legislature. Pinal County was the second-fasted-growing county in the U.S. between 2000 and 2010.

Per Data USA, in 2019 Pinal County, AZ had a population of 463k people with a median age of 39.9 and a median household income of $62,057. Between 2018 and 2019 the population of Pinal County, AZ grew from 447,138 to 462,789, a 3.5% increase and its median household income grew from $59,058 to $62,057, a 5.08% increase.

The city of Queen Creek is located primarily within Maricopa County, but the town limits extend into Pinal County on the eastern and southern borders. From the post office form on file at the National Archives, Queen Creek was originally known as “Rittenhouse”, the community growing up out of a railroad stop. In 1919 the Queen Creek Farm Company was formed by C. H. Rittenhouse, constructing that railroad stop to ship the goods from the farm.

Per Data USA, in 2019, Queen Creek, AZ had a population of 43.1k people with a median age of 35.1 and a median household income of $105,729. Between 2018 and 2019 the population of Queen Creek, AZ grew from 36,053 to 43,129, a 19.6% increase and its median household income grew from $98,214 to $105,729, a 7.65% increase. In 2019, the median property value in Queen Creek, AZ was $348,600, and the home ownership rate was 86.7%.

The economy of Queen Creek, AZ employs 19.8k people. The largest industries in Queen Creek, AZ are Health Care & Social Assistance (2,607 people), Retail Trade (2,147 people), and Educational Services (1,815 people), and the highest paying industries are Professional, Scientific, & Technical Services ($91,219), Manufacturing ($86,867), and Utilities ($81,691).

Per the appraiser, the subject property is located in Queen Creek, a Southeast suburb of the Phoenix Metro. The subject consists of 1,500SF concrete block auto service building, as well as a 4,000SF pre-engineered steel building also used for automotive services. The building is situated on a site of 39,190SF according to Maricopa County records. The property is zoned DC Downtown Core, by the city of Queen Creek. The site itself has a combination of gravel surface, asphalt, and concrete. There are no marked parking spaces, but space is plentiful.

The 1,500SF building has two roll up doors, 16ft ceilings, a 12x30 mezzanine area for storage, and 2 restrooms. The 4,000SF building is a pre-engineered steel building, with concrete floors, steel walls and roof. The appraiser noted this building has some deferred maintenance items including, dents to the exterior, roof has old paint and rust, graffiti on the south side of the property, some wood siding that has warped and lacks a central cooling unit. The appraiser did not put a value on the deferred maintenance, but it should be noted the BPO estimated it to be roughly $20,000. At this time, we are not requiring these items to be addressed, but they have been brought to the borrower's attention.

Our borrower will be a LLC, that is the current tenant of the property. They have leased this location since 2008 and are currently paying $6,000 per month in rent. It should be noted that the borrower's current rent payments are less than our proposed mortgage payment. The borrower is aware of this, and has stated that their rental payment was previously higher, and that the seller had reduced their rent temporarily due to COVID-19. The LLC reported net income of $96,015 in 2021, and a net income of ($123,798) in 2020.

The members of this LLC are husband and wife. They report a net worth of $3,022,870, and have mid-credit scores of 690 and 715. They reported income of $189,088 in 2021, and $55,163 in 2020. The husband runs and operates the subject property, and the wife works as a registered nurse.

In addition, it should also be noted that this loan will NOT have a personal guarantee. In order to obtain the down payment funds, the members of the LLC refinanced their personal residence. This loan forbade them from personally guaranteeing our loan due to the requirements of their lender. That said, the borrower will be bringing to closing $520,000 plus closing costs.

We engaged a local general certified appraiser who valued this property at $1,250,000.00 (AS-IS) Appraised Value.

We also engaged a local broker who drove by the property and took photos and performed an opinion of value (BPO) who valued this property at $1,280,769.

At a 62.40% LTV (Appraised Value) and a 60.0% LTV (Purchase Price) and an 9.0% yield, this appears to be a reasonable investment. Investing in any First Trust Deeds involves substantial risk. A large and prolonged decline in real estate values is possible. Be sure to read the Risk Factors Section of the Offering Circular carefully before investing. 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 Justine Smith

555 University Ave., Suite 150, Sacramento, CA 95825
Telephone: (916) 338-3232 * Fax: (916) 338-2328
Real Estate Broker -- California Department of Real Estate -- License Number 829677 -- NMLS Number 103430
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