Glacier View Estates Land

Blackburne & Sons is pleased to present this first trust deed secured by four land lots totaling in 7.69-acres located in Wasilla, Alaska.

The borrower is refinancing this free and clear land in order to payoff business debts. This loan also includes a 24-month payment reserve. We will hold back the funds in a trust account and will make monthly payments on the borrower’s behalf for the life of the loan. This is a 24-month interest only loan.

Our borrower plans to sell off individual lots during the term of the loan. As such we have included a partial release clause. It should be noted that this loan was originally presented at eight lots. During the appraisal process four of the lots were sold.

Matanuska-Susitna Borough (often referred to as the Mat-Su Borough) is a borough located in the U.S. state of Alaska. Its county seat is Palmer, and the largest community is the census-designated place of Knik-Fairview. As of the 2020 census, the county's population was 107,801. The borough is part of the Anchorage Metropolitan Statistical Area, along with the municipality of Anchorage to its south.

The Mat-Su Borough is so designated because it contains the entire Matanuska and Susitna Rivers. They empty into Cook Inlet, which is the southern border of the Mat-Su Borough. It is one of the few agricultural areas of Alaska.

According to the United States Census Bureau, the borough has a total area of 25,258 square miles, of which 24,608 square miles is land and 650 square miles (2.6%) is water.

Wasilla is located on the northern point of Cook Inlet in the Matanuska-Susitna Valley and is the fourth largest city in AK. The city's population was 9,054 at the 2020 census, up from 7,831 in 2010. Wasilla is the largest city in the borough and a part of the Anchorage metropolitan area, which had an estimated population of 398,328 in 2020. According to the United States Census Bureau, the town has an area of 12.4 square miles. 11.7 square miles of it is land and 0.7 square miles (1.8 km2) of it (5.64%) is water.

Located near Wasilla Lake and Lake Lucille, Wasilla is one of two towns in the Matanuska Valley. The community surrounds Mi. 39–46 of the George Parks Highway, roughly 43 mi by highway northeast of Anchorage. Nearly one third of the people of Wasilla drive the 40-minute commute to work in Anchorage every day.

The economy of Wasilla, AK employs 3.89k people. The largest industries in Wasilla, AK are Health Care & Social Assistance (677 people), Retail Trade (449 people), and Educational Services (367 people), and the highest paying industries are Mining, Quarrying, & Oil & Gas Extraction ($147,109), Utilities ($105,758), and Transportation & Warehousing, & Utilities ($77,614). In 2020, the median property value in Wasilla, AK was $258,100, and the homeownership rate was 55.4%. In 2020, the top outbound Alaska product (by dollars) was Crude petroleum with $10.1B, followed by Electronics ($7.84B) and Meat/seafood ($4.1B).

The subject property consists of four lots, ranging in size from 1.41 to 2.14-acres and are a combined total of 7.69-acres. Together, the sites form Glacier View Estates, which is a gated subdivision.

Each site is generally rectangular in shape and sloping in topography. They have no building improvements, but the sites do have a paved asphalt road adequate for ingress and egress. The sites are not zoned and this is typical for properties in this area.

The borrowers are a married couple who hold title to the property through an LLC. This entity is just a real estate holding company and does not report any income or expenses. The borrower also has a business that will be giving an entity guarantee on this loan, along with their personal guarantees.

In 2021, the LLC that will be supplying the entity guarantee reported a net loss of ($564,390), however they reported a depreciation expense of $644,436. When you add back the depreciation expense they had a net income of $80,046. In 2020, the LLC reported a net income of $326,661. The depreciation expense for 2020 was $150,787, which would bring the net income up to $477,448. The borrower explains that the reason for the losses in 2021 and 2022 were due to two new businesses recently launched that were capital intensive to start. They expect 2023 to be a profitable year. See detailed letter of explanation in the due diligence package.

Our borrowers have mid-credit scores of 678 and 689 and report a net worth of $43,531,997. Their personal tax returns for 2021 report a loss of ($322,735). In 2020, they reported $629,283 in adjusted gross income.

We hired a local General Certified appraiser who valued this property (AS-IS) appraised value of $800,000 (combined value). Each lot has a separate appraisal. Lots 8, 10, and 12 are valued at $220,000 each. Lot 14 is valued at $140,000.

We were not able to locate anyone willing to do a BPO on each lot. Also we did not order an environmental report on the properties due to it just being vacant land.

At a 11.0% yield to the investors and a 45.0% 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 Tom Blackburne
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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