Savy Space Self-Storage

George says: “There is a reason why the yield on this loan is lower than on many of our loans. The loan is simply less risky. No guarantees, folks. We never use the word ‘safe' because stuff happens.

Why do I love this loan? First of all, it's a purchase. The value of the property has been established in the open market, rather than by an appraisal (just someone’s estimate). Secondly, the buyer is putting lots of cold, hard cash down, what we sometimes call blood money - the blood the borrowers would leave on the stoop if they just walked away. Lastly, there are lots and lots of small units with small payments. That is a very good formula."

Blackburne & Sons is pleased to present this Purchase Money First Security Deed secured by 105 self-storage units located within 4 buildings totaling 10,075 SF on a 0.86 acre parcel, located in Augusta, Richmond County, Georgia.

The purpose of our loan is to purchase the subject property. The purchase price is $464,000, and our borrowers are putting $194,000 cash down plus closing costs.

Richmond County is a county located in the U.S. state of Georgia. As of the 2020 census, the population was 206,607. It is one of the original counties of Georgia, created February 5, 1777. Following an election in 1995, the city of Augusta consolidated governments with Richmond County.

Augusta-Richmond County’s economy is taking a breather. Job gains flat lined in the second half of 2021, and the recovery of lost jobs now lags compared with the state and nation. The weakness has been widespread, with bright spots limited mostly to manufacturing and logistics. The gradual easing of supply-chain stress has been enough to reinvigorate factory pay-rolls, which have almost fully recovered. The jobless rate has fallen below the pre-crisis low but still trails that of the state.

The local housing market remains on a firm footing. House price appreciation is below average but still the strongest since the early 1980s in Augusta. The rapid acceleration in prices has fueled builder interest, pushing single-family permitting near its all-time high.

Augusta is a city in Georgia, near the South Carolina border. The Augusta Museum of History includes exhibits on golf and soul singer James Brown. The Augusta Riverwalk runs along the Savannah River. Nearby, the Morris Museum of Art is dedicated to the art of the American South. The Boyhood Home of President Woodrow Wilson depicts the early life of the 28th president. Trails span the length of the 1845 Augusta Canal.

The economy of Augusta employs 259,000 people. The largest industries are Health Care & Social Assistance (37,424 people), Manufacturing (29,341 people), and Retail Trade (28,990 people), and the highest paying industries are Utilities ($74,399), Management of Companies & Enterprises ($63,158), and Professional, Scientific, & Technical Services ($58,799).

The subject is primarily in a suburban area along a road that is dominated by residential subdivisions. The primary anchor on Augusta’s west side is Augusta Mall, which is an upscale two-level, super-regional shopping mall. It is one of the largest malls in the state of Georgia, and it is the largest mall in the Augusta metro area. Augusta Mall has six anchors: Dillard's, JC Penney, Sears, Macy's, Dick's Sporting Goods, and Barnes & Noble.

The mall features many higher-end tenants, some of which cannot be found outside of Atlanta. Stores include Apple, Teavana, Banana Republic, a multi-level H&M, Build-A-Bear Workshop, Pandora, Sephora, Michael Kors, White House/Black Market, Williams-Sonoma, and a two-level Forever 21. The mall totals 134 retail stores and 1.1 million square feet of building area. Major retailers in the subject’s immediate area include Roses Discount Store, Planet Fitness, Food Lion, Dollar Tree, Lowe’s Home Improvement, Meadowland Shopping Center, Family Dollar, and CVS, amongst others.

Augusta University campus is seven miles to the north. Augusta University is a public research university and medical center. It offers undergraduate programs in the liberal arts and sciences, Business, and education as well as a full range of graduate programs and clinical research programs.

The subject is a self-storage facility located in Augusta, Georgia. The 0.86-acre property is off the intersection between Rosier Road and Windsor Spring Road. It is approximately one and a half miles southwest of Windsor Spring Road’s interchange with Interstate-520 and eight miles southwest of downtown Augusta.

The facility features four buildings that were constructed in 1994 and total 10,075SF of floor space. The structures are steel frame construction with seamed metal panel sides and roofs on concrete slabs. The storage units are fully fenced with a video surveillance system and 24-hour access. The units are all non-climate-controlled and have drive-up access to facilitate loading and unloading.

The facility features (10) 5’x5’ units, (48) 5’x10’ units, (13) 5’x15’ units, (5) 10’x10’ units, (6) 10’x15’ units, (17) 10’x20’ units, (3) 10’x25’ units, and (3) 10’x30’ units for a total of 105 units. The facility is currently 50% occupied versus a stabilized market occupancy rate of 90%. It is currently fully automated with no on-site property management.

Per our borrower’s business plan, they project that they will be able to increase occupancy, increase economic occupancy, and turn the facility around within 2-3 years resulting in a net valuation increase of $200,000-$500,000 based upon market conditions and a significant increase in NOI. A copy of the buyer’s business plan will be included in the due diligence package for review.

Our borrower is a married cman who will hold title personally. He will also provide a personal guarantee on our loan.

The husband works for Amazon as a Senior Manager. He reports a net worth of $1,124,900 and has a mid-credit score of 802.

In 2022, his personal tax returns reported adjusted gross income of $312,513 and in 2021 he reported $172,571 in adjusted gross income. According to the 2021 return, this was income solely from the husband as they were not married yet.

The seller provided limited financials on the subject property. They provided a 2022 P&L showing a $14,564 loss and a 2023 YTD P&L showing a $15,588 loss.

Per the borrower: "When we initially approached the seller to acquire the property in April of 2023 and negotiated the price and terms of the agreement the occupancy of the facility stood at 41.1% (57 units available, 6 needing repairs, and 44 rented) which produced a monthly revenue of $3,254.03. Since we have gone under contract the status of the facility has improved to 44.8% rented, monthly revenue has increased to $3,454.00, and all units have had their door springs repaired leading to all units being rentable and available for advertising."

We engaged a local MAI appraiser who provided an (AS-IS) value of $500,000. We also engaged a local broker who performed an opinion of value. They valued this property at $445,000.

At a 9.0% yield to investors and a 54.0% LTV (Appraised Value) and 58.1% LTV (Purchase Price), 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
Publicly advertised to California residents only under California Department of Business Oversight business plan permit.
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