Jenny Brook Road Mobile Home Park

George says, “This loan has some appealing features. First of all, the loan amount is small. All else being equal, small loans are less risky because the payments are small. Secondly, this is housing. People always need a place to live. Lastly, much of the the proceeds of this loan are being used to fix up the property. It’s admittedly an unattractive property right now, but it should look better when the work is done."

Blackburne & Sons is pleased to present this First Mortgage secured by a 12-pad mobile home park and single-family residence on 23.5-acres, located in Wawarsing, New York.

The proceeds of this $300,000 loan will go towards paying off $130,000 in seller financing and the remaining funds will be used to rehab the subject property. There will also be a construction holdback in the amount $139,000.

Ulster County is a county in New York that is situated along the Hudson River. As of the 2020 census, the population was 181,851. The county seat is Kingston and the county is named after the Irish province of Ulster. Ulster County is in southeastern New York State, south of Albany, immediately west of the Hudson River. Much of it is within the Catskill Mountains and the Shawangunk Ridge. Ulster County has Minnewaska State Park Preserve, Mohonk Preserve, Sundown State Park, VerNooykill State Forest, Witches Hole State Forest, and Shawangunk Ridge State Forest. The Sam's Point section of Minnewaska includes rare dwarf pine trees and Verkeerder Kill falls. The county's highest point is Slide Mountain, at approximately 4,180 feet (1,270 m) above sea level. The lowest point is sea level along the Hudson River.

Ulster County contains a large part of Catskill Park and the Catskill Forest Preserve. The former Delaware and Hudson Canal brought Pennsylvania coal to Kingston on the Hudson. Former Orleans band member John Hall served in the Ulster County legislature before moving to the 19th Congressional District to run for Congress. Ulster County has continued to be a popular vacation destination for many decades. The county is home to many outdoor landscapes, including the Catskill Mountains, the Hudson River, Minnewaska State Park, Catskill Park, Shawangunk Mountains and the Shawangunk Ridge. Each offers various recreation opportunities, including hiking, bicycling, skiing, horseback riding, kayaking, rock climbing, hunting and fishing.

The county also includes more than 40 miles (64 km) of rail trails along the Hudson Valley Rail Trail, Wallkill Valley Rail Trail, and O&W Rail Trail. The Walkway Over the Hudson, the world's longest pedestrian and bicycle bridge which spans the Hudson River, is connected within Ulster County trails.

Wawarsing is a town in the western part of Ulster County, New York which has a population of 12,771, per the 2020 census. It has three state forests (Shawangunk Ridge, VerNooykill, and Witches Hole), as well as most of Minnewaska State Park and Sam's Point Preserve, and portions of the Catskill Preserve and Sundown State Park. US 209 crosses the town, passing through many principal communities: Spring Glen, Laurenkill, Ellenville, Napanoch, the hamlet of Wawarsing, Soccanissing, and Kerhonkson.

According to the United States Census Bureau, the town has a total area of 133.9 square miles (347 km2), of which 130.8 square miles (339 km2) is land and 3.1 square miles (8.0 km2) (2.32%) is water. The western and southern borders of the town are Sullivan County, New York. The median household income in 2021 was $54,111 and the median home value was $162,100 with a home ownership rate of 62.8%.

The subject property is located on the north side of Lower Jenny Brook Road and the west side of US-209 in the town of Wawarsing. Lower Jenny Brook Road runs west from US- 209 and concludes at NY-55. The site is irregular in shape and equipped with Public Electric & Water as well as Wells & Septic System. The property consists of 23.5-acres in total (9.30-acres of Primary Site and 14.20- acres of Excess Land). The roads in the park are mostly gravel and appeared to be in average condition, per the appraiser.

The site is improved with a 2,216SF single family residence and 12 mobile home pads. The SFR is a two-story shell structure with a class D frame. Out of the 12-pads, 9 are occupied and 3 are vacant. Each pad site has electric hookups and its own septic tank. Each mobile home is provided with approximately two parking pad spaces. According to the rent roll, there are three park owned homes, one of which the borrower resides in, giving him the ability to closely manage the property. The property currently makes $6,200 per month in rental income.

This loan will include a $139,000 holdback back for rehab, most of which will be to fix up the SFR with a new roof, siding, doors, etc. The remaining rehab will include the following: Debris cleanup ($26,000), Septic system repairs ($32,000), Waterlines replace & repaired ($12,000), Tree removal trim ($33,000), Roadway repairs ($14,000) and Surveyor ($2,500). It should be noted that there are several open code violations on the property. The reason for this is that they are building permits to improve some of the mobile homes that exist on the property.

The borrower is a married couple who will be personally guaranteeing the loan and holding title through a corporation that was incorporated in March of 2020. The husband is the president of the Corporation, which is the operating entity for the property. This entity reported a net income of $10,150 in 2022 and ($2,175) in 2021. We were also provided a profit & loss statement for 2023 which shows a net income of $19,333.81 from January through March.

Working as a business owner and a book keeper, our guarantors reported a net income of $44,718 in 2022, however, after adding back depreciation it was $90,986. In 2021, they reported a net income of $32,572, however this was $60,612 after adding back depreciation. They have mid-credit scores of 657 and 603, and a self-reported net worth of $595,787.

Our borrower plans on using the proceeds from this loan to pay off the seller financing in the amount of $130,000 and use the rest for rehab on the property.

We engaged a local MAI appraiser who valued this property at $534,000. We also engaged a local broker to perform a Broker’s Price Opinion and they valued the property at $500,000.

At a 10.0% yield to investors and a 56.2% LTV 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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