Pompano Beach Residential Condo

George says, “This is a very attractive hard money first mortgage. The condo overlooks the ocean, and our borrowers have credit scores of over 700. Unlike when we make a loan on a small apartment building, the grounds and security here are maintained by the condominium association. This significantly reduces our risk."

"Lastly, interest rates around the world are plummeting. I predict that Blackburne & Sons will be selling first trust deeds with net yields of just 3% within two years. Did you know that the the U.S. ten-year bond has plummeted from 2.03% ten days ago to just 1.6% today? Yields on the 30-year German treasury bond went negative yesterday for the first time ever yesterday. The volume of government bonds worldwide with negative yields soared form $11 trillion one week ago to over $15 trillion today. A yield of 7% is insanely high. Jump on this deal!"

Blackburne & Sons is pleased to present this new first mortgage secured by a 2,353SF residential oceanfront condo, with two bedrooms and two bathrooms located in Pompano Beach, Florida.

Broward County is located in the southeastern part of Florida. According to a 2017 census report, the county had a population of 1,951,260, making it the second-most populous county in the state and the 17th-most populous county in the United States. Broward County is one of the three counties in South Florida that make up the Miami metropolitan area.

Pompano Beach is in northeastern Broward County, along the Atlantic Ocean. It includes about 3 miles of beachfront, and is a principal city of the Miami metropolitan area. According to Metro Atlantic, Pompano Beach is currently in the middle of a redevelopment process to revitalize its beachfront and the historic downtown. The city has also been listed as one of the top real estate markets, being featured in CNN, Money and the Wall Street Journal as one of the country's top vacation home markets. Pompano Beach Airpark, located within the city, is the home of the Goodyear Blimp Spirit of Innovation.

Built in 1982, the development, in which the subject property is located, is a five-story oceanfront condominium building, inclusive of 121 units located on a 1.81 acre parcel. The common areas include a swimming pool, clubhouse, and gym. Our subject condominium consists of a 4th floor unit with 2,353SF and five rooms total; two bedrooms and two bathrooms, ocean view balcony, central AC and heat, and one assigned garage/carport. Monthly homeowner association (HOA) dues are $1,459.

This subject property was previously used as a secondary/vacation home for the borrowers, and is now vacant (although fully furnished) and listed for sale, as his wife has the beginning stages Alzheimer’s disease and the vacation home is no longer needed. Current reported list price of the subject condo is $740,000, which includes the furnishings. The husband has pledged that his wife is still of sound mind to enter into an agreement, even with the early signs of her disease. If the subject property does not sell in the coming months, the borrower’s plans are to lease the property. Current market rent determined by the rent survey in the recent appraisal, provides a market rent of $4,950. See Income Analysis above, based on the pro forma prepared by the appraiser.

The reason for this loan is to pay off the current first, but also replenish funds to the borrower’s business that was used as a down-payment for a Rhode Island residential property, used as their primary residence and for additional investment purposes.

The borrower’s company is an investment firm that invests in stocks, real estate, equipment, etc. and is an experienced Wall Street investor, and is stated to be a “turnaround” specialist. He owns another business called EIS Wire & Cable, in South Hadley, Massachusetts, and is the defense electronics industry. He bought the company 21 years ago and holds a 2/3rds ownership interest. He is the Chairman of the Board and has a complete management team under him currently. However, the plan is to sell his portion of the company to concentrate on spending more time with his wife and family.

Our borrowers, a married couple, will be holding title to the property personally. The wife is a retired lawyer and the husband is an experienced investor (discussed above). They have mid-credit scores of 734 and 741, and a reported net worth of $15,268,000. Extensions were filed 2018, however a 2018-1099 reports income of $1,046,847. Personal income for 2017 was reported at $1,104,070, and $328,908 in 2016. The business returns flow through to their personal returns.

We engaged a local appraiser who valued this property “As Is” at $725,000.

At an 7.0% yield, 66.0% LTV (based on Appraised Value) this appears to be a very reasonable investment. Investing in any first mortgage involves substantial risk. A large and prolonged decline in real estate values is possible. Be sure to read the Risk Factors section of the Offering Circular carefully before investing. Foreclosed property almost always needs to be renovated before it 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.

Blackburne & Sons Realty Capital Corporation--For more information, contact Angela Vannucci
4811 Chippendale Drive, Suite 101, Sacramento, CA 95841
Telephone: (916) 338-3232 * Fax: (916) 338-2328
Real Estate Broker -- California Bureau of Real Estate -- License Number 829677
Publicly advertised to California residents only under California Department of Corporations business plan permit.
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