Willingboro NJ Mixed-Use Refinance

George says: "By hard money standards, this is a superb loan. Did you catch the part where the area has a homeownership rate of 80%? This is New Jersey, folks, in the MSA of Philadelphia. The Philly area has jobs, and our property is far enough out so that the inner-city lowlifes are far away. 80% homeownership rate. Sweet. I normally recommend taking just $10,000 in each of our deals, but I would definitely not disapprove if you took $25,000."

Blackburne & Sons is pleased to present this First Mortgage secured by two mixed-use buildings totaling 9,886SF on a 0.64-acre parcel, located in Willingboro, Burlington County, New Jersey.

The purpose of this loan is to pay off the matured first mortgage in the amount of $580,000, property taxes in the amount of $20,000, prepay property insurance for one year and cover closing costs.

COUNTY INFORMATION

Burlington County is a county in the South Jersey region of the U.S. state of New Jersey. The county is the largest by land area and ranks second behind neighboring Ocean County in total area. Its county seat is Mount Holly. As of the 2020 census, the county was the state's 11th-most-populous county, with a population of 461,860, its highest decennial count ever and an increase of 13,126 (+2.9%) from the 448,734 recorded at the 2010 census, which in turn had reflected an increase of 25,340 (6.0%) from the 423,394 enumerated at the 2000 census. The most populous place in the county was Evesham Township with 46,826 residents as of the 2020 census. Washington Township covered 102.71 square miles, the largest area of any municipality in the county.

Burlington County is located east of the Delaware River and borders Philadelphia, the nation's sixth-largest city. It is part of the Philadelphia-Camden-Vineland, PA-NJ-DE-MD combined statistical area, also known as the Delaware Valley. However, the county stretches across the state, and its southeast corner reaches tidal estuaries leading to New Jersey's Great Bay, which separates the county from the Atlantic Ocean. The county is part of the South Jersey region of the state.

CITY INFORMATION

Willingboro Township (known from 1959 to 1963 as Levittown and Levittown Township) is a township in Burlington County, in the U.S. state of New Jersey. It is a suburb of Philadelphia and part of the state's South Jersey region. The township, and all of Burlington County, is a part of the Philadelphia-Reading-Camden combined statistical area and the Delaware Valley. According to the U.S. Census Bureau, the township had a total area of 8.14 square miles (21.08 km2), including 7.73 square miles of land and 0.41 square miles of water (5.09%).

The township borders the Burlington County municipalities of Burlington Township, Delanco Township, Delran Township, Edgewater Park Township, Moorestown Township, Mount Laurel Township and Westampton Township. Rancocas Creek drains Willingboro and forms its SW boundary while U.S. Route 130 forms its NW boundary.

In 2022, the median property value in Willingboro, NJ was about $350,100, with a homeownership rate of 80.8%, and the median household income was $45,138.

The subject property is a 0.64-acre parcel that is rectangular in shape and level in topography. The site is located in the Philadelphia-Camden-Wilmington MSA, which has an estimated 2024 population of 6,307,532. The site is improved with two buildings, built in 1940, that consist of 9 units (2 residential units and 7 commercial units) and a total of 9,886SF.

The building located at the front of the property consists of two units, Unit A and Unit B, for a total of 1,354SF. Unit A consists of 800SF and is currently used as a beauty salon. This unit is currently leased for $1,600 per month and lease expires in July of 2028. Unit B is 554SF and is built out as a residence and is located on the second floor. This unit is currently leased for $800 per month and this lease expires in August of 2025.

The building located towards the back of the property consists of four offices (Unit C, Unit F, Unit G, and Unit H), one retail unit (Unit D), one residence (Unit E), and one storage unit (Unit J) for a total of 8,532SF. Please note, Unit H is not leased to anyone. This unit is being used as storage space by the borrower & his business.

The four office units range from 400SF to 1,368SF and are leased for between $1,400 and $1,900 per month. The leases vary from 2-5 years.

The retail unit is owner occupied and consists of 3,553SF. It is currently used as an African & Tropical inspired grocery store and located towards the rear of the building. The lease for this unit states a monthly rental amount of $4,000.

The residential unit on the rear building consists of 1,500SF and is currently leased for $675 per month. This lease expires in February of 2026.

The storage unit is 240SF and is leased for $200 per month. This lease expires in September of 2027.

In total, both buildings are 100% occupied and bring in a gross monthly income of $11,146. The properties have undergone $40,000 to $50,000 worth of capital expenditures over the past few years that consisted of interior walls, bathroom fixtures, lighting upgrades, new boiler, and roof repairs.

BORROWER SUMMARY

The borrower is a married couple who hold title to the property through a limited liability company (LLC), of which they are each 50% owner. They will both be providing a personal guarantee on our loan.

The borrowing entity reports its income in the borrower’s personal tax returns on a Schedule C. We were provided a profit & loss statement showing a net income of $159,284.51 through October 15, 2024.

Our guarantors work as an African & Tropical inspired grocery store business owner and a program coordinator for the NJ State Department of Health. They self-reported a net worth of $1,113,433.59 and have mid-credit scores of 635 & 722. Their tax returns reported adjusted gross income of $60,021 in 2023 and $159,603 in 2022. The reason why income was down in 2023 is due to the wife sustaining an injury at work (May 2022). She has been on workman’s comp since then and her employer pays for all medical and surgical expenses. She expects to go back to work by January 2025.

The borrowers purchased the property in July 2023 for $850,000, and took $580,000 in seller financing that has now matured.

VALUATION SUMMARY

We hired an MAI appraiser who valued this property with an (AS-IS) value of $1,200,000. Per the appraiser, the market value conclusion of $1,200,000 is above the most recent purchase, which is considered to be within reasonable market parameters based on changes in occupancy and changes in the market.

At the time of the previous sale, Units A and Units H were vacant, while both of these units are currently occupied. The buyer was a previous tenant, as a grocery tenant in Unit D, who approached the seller if there was any interest in a sale. The original offer was $850,000 while the seller countered with $875,000. After negotiations the final price of $850,000 was chosen and the subject went under contract January 2023.

A local broker was also engaged who performed a drive-by opinion of value (BPO) and valued this property at $950,000.

At an 12.0% yield to investors and a 52.5% LTV (AS-IS) Leased Fee 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.

ACCREDITATION STANDARDS

Please note this offering is a SEC Regulation D filing and will be done through a Private Placement Memorandum. In order to invest, you must be an accredited investor. Generally speaking, an accredited investor is an individual:

(a) whose individual income exceeds $200,000 in each of the past two years, with reasonable expectation of reaching the same going forward OR
(b) whose joint income with spouse exceeds $300,000 in each of the past two years OR
(c) your NET WORTH exceeds $1,000,000 (exclusive of your primary residence) OR

If you plan on investing through an entity, the entity can qualify if ANY of the following are met:

(a) all equity owners must be accredited OR
(b) any trust with more than $5,000,000 in assets OR
(c) ERISA with either $5,000,000 in assets OR a bank, insurance company, or registered investment advisor as it's trustee OR
(d) any self directed ERISA with an accredited investor(s) making the business decisions OR
(e) an IRA owned by an accredited investor

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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