Lakewood Land Lot

Blackburne & Sons is pleased to present this First Mortgage secured by 7,803SF of vacant land, located in Lakewood, New Jersey.

Our borrower purchased the property in March of 2023 for $600,000. The borrower paid all cash for the property. In addition, he is in the process of completing the purchase of the adjacent lot. He will eventually develop the property, however that is not the purpose of our loan. The proceeds of this $300,000 loan, after closing costs, will be cash out and go toward other real estate investments.

Ocean County is a county located along the Jersey Shore in the south-central portion of New Jersey, and the southernmost county in the New York metropolitan area. It is the only U.S. county named Ocean. The county borders the Atlantic Ocean on the east and its county seat is Toms River. Ocean County is located 50 miles (80 km) east of Philadelphia, 70 miles (110 km) south of New York City, and 25 miles (40 km) north of Atlantic City, making it a prime vacation destination for residents of these cities during the summer. As with the entire Jersey Shore, summer traffic routinely clogs local roadways throughout the season.

According to the U.S. Census Bureau, as of the 2020 Census, the county had a total area of 914.84 square miles, making it the largest county in New Jersey in terms of total area (ahead of Burlington County), of which 628.29 square miles was land (68.7%) and 286.55 square miles was water (31.3%). Much of the county is flat and coastal, with an extensive shoreline and many beaches along the Jersey Shore, including Barnegat Light, Beach Haven, Harvey Cedars, Lavallette, Mantoloking, Seaside Heights, Seaside Park, Ship Bottom, and Surf City.

CITY INFORMATION

Lakewood Township is the most populous township in Ocean County, in the U.S. state of New Jersey. A rapidly growing community, as of the 2020 United States census, the township's population was 135,158. As a major hub of Orthodox Judaism, Lakewood is home to Beth Medrash Govoha (BMG), the largest yeshiva outside of Israel. The large Orthodox population, which comprises more than half the township's population, strongly influences the township's culture and wields considerable political clout in the township as a voting bloc. The largest universities in Lakewood, NJ are Beth Medrash Govoha (943 degrees awarded in 2021), Georgian Court University (635 degrees), and Seminary Bnos Chaim (173 degrees).

In 2020, the median property value in Lakewood, NJ was $497,300 with a homeownership rate of 37.6% and the median income was $50,139. The economy of Lakewood, NJ employs 14.7k people. The largest industries in Lakewood, NJ are Educational Services (4,364 people), Health Care & Social Assistance (1,864 people), and Professional, Scientific, & Technical Services (1,329 people), and the highest paying industries are Information ($145,406), Finance & Insurance ($66,161), and Public Administration ($58,750).

PROPERTY INFORMATION

The subject is located on the southbound side of Cherry Street within the R7.5 – Residential Zone of Lakewood Township. It consists of a generally rectangular shaped, single parcel of land containing 7,803 SF or 0.18 acres. The property is currently vacant, but does appear to have utilities including water, sewer, electric and gas.

The land use in the subject’s immediate neighborhood consists of a significant amount of commercial property, comprising of a mix of many property types. Commercial uses in the area include multitenant retail centers, medium-sized retail/industrial/distribution-type properties, small to medium sized, freestanding office and retail properties, as well as service-related uses, restaurants, gas stations/convenience stores and banks.

Our borrower purchased the property in March of 2023 for $600,000. The borrower paid all cash for the property. In addition, he is in the process of completing the purchase of the adjacent lot. He will eventually develop the property, however that is not the purpose of our loan.

Our guarnators are a married couple who will hold title through a Limited Liability Company, and will provide a personal guarantee on our loan. The LLC is a holding entity and does not report any income.

Our guarantors work as a developer / business owner and a clerk. They self-reported a net worth of $702,700 and they have mid-credit scores of 740 and 636. They show an adjusted gross income of $130,165 in the year 2022 and $73,399 in the year 2021. The husband owns and manages an equipment company used for development. This company shows a loss of ($2,348) in 2022 and a loss of ($33,294) in 2021. Once you add back depreciation, the entity reports a net income of $5,161,520 in 2022 and $2,518,128 in 2021.

Borrower purchased the property in March, 2023 for $600k all cash. The borrower is in the process of purchasing the adjacent lot and their long-term plan is to develop the two lots together and then subdivide them.

At a 10.0% yield to investors and a 38.5% 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
Publicly advertised to California residents only under California Department of Business Oversight business plan permit.
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