County Road Residential II

Angela says, “The borrower of this first trust deed is a repeat client of Blackburne & Sons, with this being the third loan originated for this borrower. While past performance is not a guarantee of future performance, all payments on loans serviced by our firm have been made timely; therefore, one may consider this borrower to be seasoned. In addition, the borrower will be bringing in $55,000 to pay down the loan balance to the $660,000 in this offering. Finally, this first trust deed is secured by a non-owner occupied, single-family residence on 59 acres, currently leased for $5,000 per month. Again, no guarantees implied, but the seasoned payments from the borrower and the fact he is paying down the balance of the loan at closing, are all strengths to be considered when deciding if this offering may be a fit for your portfolio.”

Blackburne & Sons is pleased to present this first deed of trust secured by a 4,334SF single family residence with a 2,432SF finished basement, on three parcels totaling 59 acres of land, located in Atlanta, Texas.

This purpose of this loan is to refinance a maturing loan currently serviced by Blackburne & Sons. The outstanding balance on the current loan is $715,000, and the borrower will be paying down the note at closing by $55,000. Including closing costs, the borrower will be coming to closing with approximately $78,000. During the 12-month term of the loan that is being paid in full, the borrower has remitted all monthly payments timely.

Atlanta is located in Cass County, which is northeastern Texas. As of the 2010 Census, Atlanta had a population of 5,675 and is noted as the largest city in Cass County. The City of Atlanta is in close proximity to three major interstate highways; Interstate 20 to the south, Interstate 30 to the north, and Interstate 49 to the east. It is also home to U.S. Highway 59, the highest trafficked, non-interstate highway in the nation which is a future Interstate 369 corridor.

Located about 20 minutes from the growing twin-city of Texarkana, Atlanta is an ideal hub for transportation and distribution centers due to its close proximity to interstate highways and safe distance from coastal areas prone to hurricanes. Atlanta is also served by Texarkana College and Texas A&M- Texarkana. Just an hour drive from Atlanta is Shreveport and Bossier City, Louisiana and about five hours from Oklahoma City, Oklahoma, Memphis, Tennessee, and Houston, Texas.

The subject neighborhood includes the cities of Atlanta and Queen, Texas. Atlanta is the commercial center for the east section of Cass County. The main employer is the International Paper Mill located 7 miles northeast, with this area inclusive of small residential subdivisions and individual home sites of 1-20 acres. Per the appraiser, there is average access to shopping, schools, and other facilities. Employment stability, property compatibility, and police and fire protection are considered average.

Considered as a rambler-style house, the subject property has a total of 4,334SF, with 5 bedrooms and 3 bathrooms. It also has a 2,431SF basement that is finished out with a living room, kitchenette, bedroom and bathroom. The subject is constructed of stone and wood siding exterior, metal roof and double-pane windows. The house is situated on a one-acre parcel, with two adjoining parcels of 57.00 acres and 1.00 acre, making this a total of 59.00 acres to be secured by this loan. The land includes some timber and a pond. Houses similar to this size are not common for the area.

The interior of the subject has an open ceiling in the living area, with crown molding and built-ins throughout. The kitchen has solid surface countertops. The master bathroom has his and her area, with a separate jetted tub and a tile shower. There is a dumb waiter in the side entry hall. The flooring consists of tile and carpet throughout. There is also a five, detached double-car garages (24x30 each) in the rear yard, one single car detached garage in the side yard, and one detached double-garage with carport and storage (31x49), connected by an awning to the main house. There is a workshop (60x50) with overhead door in the front side yard. There is also manufactured home on the property with an estimated value of $75,000, not included in the subject property value. The subject is connected to a private septic system, which is typical for the area. This does not have a negative impact on marketability, per appraiser. Per appraiser, there is no zoning designation for this property given the fact that the property resides outside of the city limits.

Currently the property is leased for $5,000 per month. The appraiser notes that Texarkana / Atlanta barely has a handful of million dollar homes, none of which are for rent or have been rented in the past. The top rent for this area that the appraiser has on file is $2,000. Therefore, the appraiser has no information available to accurately provide us an operating statement or market rent survey for this property.

Our borrower is an unmarried man and holds title to this property personally. The borrower is a professional football player, offensive tackle for the Philadelphia Eagles of the National Football League (NFL), and has been with this team since 2009. The Philadelphia Eagles proudly won the Super Bowl in February 2018. Prior to that he was signed by the Buffalo Bills as an undrafted free agent from 2004-2008, as a tight end. His college career was at the University of Arkansas.

He reports a net worth of $2,918,000 and has a mid-credit score of 676. Per the borrower’s personal tax returns, in 2018 his adjusted gross income was $7,035,859, in 2017 his income was $11,390,882 and in 2016 it was $8,764,303.

As mentioned previously, this loan is to pay off a current loan serviced by Blackburne & Sons. This loan is one of two loans to this borrower, so this will be the third one with this borrower. The borrower has had a consistent payment history with Blackburne & Sons, on all loans, thus far. Future performance is never guaranteed but past performance can be a positive indicator

We engaged a local appraiser who valued this property at $1,100,000, which is the same appraised value of the subject property one year ago.

At a 10.0% yield to investors and a 60.0% 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 George Blackburne IV
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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