Quincy Street Triplex

George Says: "This is a garden variety fix and flip. The advantage of having residential income property as collateral is that people always need a place to live."

Blackburne & Sons is pleased to present this First Mortgage secured by a 4,668SF triplex on 0.09-acre parcel, located in Chicago, Cook County, IL.

The primary purpose of this loan is to rehab the subject property. This loan will include a construction holdback in the amount of $185,000, which will be held via a 3rd party company, who will be disbursing the funds in draw phases. The remaining funds will be used to payoff the current first on the property in the amount of $125,000.

Cook County is the most populous county in the U.S. state of Illinois and the second-most-populous county in the United States, after Los Angeles County, California. More than 40 percent of all residents of Illinois live within Cook County. As of 2020, the population was 5,275,541. The county seat is Chicago, the most populous city in Illinois and the third most populous city in the United States. The county is at the center of the Chicago metropolitan area. Cook county is also the sixth largest county in Illinois by area.

The city is home to approximately 54% of the entire county's population. The part of the county outside of the Chicago and Evanston city limits is divided into 29 townships; these often divide or share governmental services with local municipalities. Geographically, the county is the sixth-largest in Illinois by land area and the largest by total area. It shares the state's Lake Michigan shoreline with Lake County. Including its lake area, Cook County has a total area of 1,635 square miles, the largest county in Illinois, of which 945 square miles is land and 690 square miles (42.16%) is water. Land-use in Cook County is mostly urban and densely populated.

Chicago is the most populous city in the U.S. state of Illinois and in the Midwestern United States. With a population of 2,746,388, as of the 2020 census, it is the third-most populous city in the United States after New York City and Los Angeles. As the seat of Cook County, the second-most populous county in the U.S., Chicago is the center of the Chicago metropolitan area, often colloquially called "Chicagoland" and home to 9.6 million residents. Located on the shore of Lake Michigan, Chicago was incorporated as a city in 1837 near a portage between the Great Lakes and the Mississippi River watershed.

In 2023, the median property value in Chicago, IL was $315,200, with a home ownership rate of 45.5%, and median household income was $75,134. The economy of Mauldin, SC employs 14k people. The economy of Chicago, IL employs 1.38M people. The largest industries in Chicago, IL are Health Care & Social Assistance (191,286 people), Professional, Scientific, & Technical Services (184,117 people), and Educational Services (140,196 people), and the highest paying industries are Management of Companies & Enterprises ($100,644), Utilities ($100,173), and Finance & Insurance ($95,093). The largest universities in Chicago, IL are University of Illinois Chicago (9,307 degrees awarded in 2023), University of Chicago (7,680 degrees), and DePaul University (5,887 degrees).

The neighborhood surrounding the subject is the largest community area in Chicago land. Per the appraiser, the neighborhood is mostly residential and located roughly 6 miles west of downtown. Wide range of property ages, styles, and degrees of updating. Most major amenities located in town and the I-290 provides linkage to the entire metro area. The neighborhood was mostly built up in the early 1900s, but there is newer construction throughout.

The subject property consists of a 0.09-acre parcel that is rectangular in shape and level in topography. The site is improved with a 3 story,4,668SF triplex building that was originally built in 1924. Each unit is roughly 1,556 SF in size and is equipped with 2 bedrooms and 1 bathroom, a dining room, kitchen, living room and deck. There is also a 1,464 SF unfinished basement and 2 car garage. All typical utilities are available to the subject.

The borrower purchased this property in 2018 for $70,000. Since the purchase, he planned to put roughly 126K into the subject property. However, the work was not able to be completed due to the borrowers health condition. He plans to use our loan to complete about $185,000 worth of rehab. This will include debris removal, roof repair for both the main building and the detached garage, fencing replacement in the front, updated HVAC, plumbing and drywall, paint, new windows and doors, flooring, light fixtures and bathroom fixtures. The borrower is hiring a 3rd party contractor to do the rehab and the contractor's bid will be provided in the due diligence package. Given that the property is under rehab, it is currently vacant.

Our guarantor is a married man who will be holding title to the property via a limited liability company, with him personally guaranteeing this loan. It should be noted that his wife is not on our loan and will not be providing a personal guarantee. The LLC is owned 100% by the guarantor and specializes in property management. The income for this entity is reported on the borrower’s personal tax returns, which show a net business loss of $72,000 in 2023 and $57,893 in 2024.

The guarantor self-reported a net worth of $185,643 and has a mid-credit score of 562. He works as an electrical engineer at the Federal Aviation Authority and has a BSEE from University of Illinois - Chicago. He reported an adjusted gross income of $148,994 in 2024 and $43,971 in 2023. The reason for the borrowers poor credit score is that he became delinquent after not being able to work for 6 months due to kidney disease. This year he got a successful kidney transplant, and is back to working.

We hired an MAI appraiser who valued this property at $205,000 (AS-IS) and $530,000 ARV.

At a 11.0% yield to investors and a 168.0% LTV (AS-IS) and 65.0% ARV 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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