Marysville Washington Residential

George says: "This is another deal that is arguably less risky than our typical loan. Each of you needs to own a small piece of lots of lower risk deals like this - no guarantees, folks - so you will have income during the next great recession. It’s a pretty good bet that people will still need vegetables during the next slump." "

Blackburne & Sons is pleased to present this First Trust Deed secured by a 1,262SF single family residence, and 11 additional structures on a 7.51-acre site, located in Marysville, Washington.

The proceeds of this loan will go towards working capital and tenant improvements.

COUNTY INFORMATION

Snohomish County is the third-most populous county in Washington. As of the 2020 census, the county had a population of 827,957. The county seat and largest city is Everett. The county forms parts of the Seattle metropolitan area. Snohomish County now has 18 incorporated cities and 2 towns with their own local governments, in addition to developed unincorporated areas. The county is named for the indigenous Snohomish people. The largest Native American tribe in the area when the settlers arrived in the 19th century.

According to the United States Census Bureau, the county has a total area of 2,196 square miles, of which 2,087 square miles is land and 109 square miles is water. The county is the 13th largest county in Washington by land area. The largest universities in the county are Everett Community College, Edmonds College, and Evergreen Beauty and Barber College-Everett. Per Data-Usa, the median household income is $89,273 with a median property value of $440,100. In 2020, there were 416,375 people employed in the county. The largest industries in Snohomish County, are manufacturing (62,148 people), health care & social assistance (53,321 people), and retail (49,386 people).

CITY INFORMATION

The city of Marysville was established in 1872 as a trading post by James P. Comeford, but was not populated by settlers until 1883. The city is located 35 miles north of Seattle, adjacent to Everett on the north side of the Snohomish River delta. Marysville is the second-largest city in Snohomish County after Everett. As of 2015, Marysville was the fastest-growing city in the state of Washington. Growing at an annual rate of 2.5 percent. According to the Census Bureau’s 2010 census, the city has a total area of 20.94 square miles, of which 20.68 square miles is land and 0.26 square miles is water.

In 2020, the median property value in Marysville was $353,100, and the home ownership rate was 70.2%. The economy of Marysville employs 35,400 people. The largest industries in the city are Manufacturing (6,751 people), Retail Trade (4,888 people), and Health Care and Social Assistance (4,028 people). The highest paying industries are Utilities ($93,438), Public Administration ($75,284), and Manufacturing ($69,851).

The subject property is located approximately 0.75 miles west of I-5 in the city of Tulalip. Please note, the appraiser has this property located in Tulalip, WA. It is our understanding that Tulalip is a census designated place, but not a city proper. The subject neighborhood is residential in character, with multi-family, condominiums, and retail uses. The property is served by community water and a private septic system, which is common for this area.

The single-family residence is 1,262SF and was built in 1935. It contains 1 bedroom, 1 bathroom. The property is equipped with a detached shop, 2 detached garages, a storage building, 2 large plastic greenhouses and 3 additional lighter material greenhouses totaling over 5,800SF on 7.51 acres. There is a total of 12 buildings on the subject property.

The property is leased to the former seller for $7,600 per month. The property functions as a grow facility for micro greens and vegetables. This includes kale, spinach, alfalfa, etc.. The property is also equipped with a hot house that grows carrots, potatoes, etc., and hydroponics.

Our borrower is a single man who holds title through a newly formed corporation. He will also be personally guaranteeing this loan. The guarantor has a mid-credit score of 663 and reports a net worth of $1,287,380. He reported adjusted gross income of $124,961 in 2022 and $127,961 in 2021.

The borrower obtained the property in an atypical fashion. The borrower owns and operates a tech company and the former owner of the property was one of his clients. In 2022, after some negotiations, they agreed that the purchase price of the property would be no more than $250,000, the minimum the county tax dept would accept and that he would in exchange have stock options for $750,000 in shares of the borrowers tech company, meaning that no cash was exchanged when the borrower assumed ownership of the property.

The proceeds of the loan will go towards property improvements and working capital. None of the funds will be held back. Per the borrower, these improvements will consist of gutting the interior and remodeling / expanding the existing 1,262SF, 3 bedroom structure by adding an additional bathroom, with new dry wall, sidings, roofing, adding a 2-car garage, as well as connecting it to other structures already on the same property, expanding the over all square footage by approximately 800SF. They will also be putting in mid-grade fixtures, adding smart home features including solar panels and modernizing the kitchen and electrical. The borrower expects these improvements to triple property value. Upon expiration of the current lease, they will flip the property or prior to the expiration if market conditions improve exponentially.

At a 9.0% yield to investors and a 38.0% 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 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
Publicly advertised to California residents only under California Department of Corporations business plan permit.
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