Marysville WA Residential II

George Says: "The modest 10% yield tells you that we here at Blackburne & Sons think that this deal is significantly less-risky than our typical deal. No guarantees, folks. Every first trust deed involves substantial risk."

Blackburne & Sons is pleased to present this First Trust Deed secured by a 1,610SF single family residence, plus 11 additional buildings on a 7.51-acre site, located in Marysville, Washington.

The purpose of this loan is to pay off the current Blackburne & Sons loan in the amount of $247,361. The remaining funds will be used to rehab the property, mainly to install a new septic system. The original loan was made to the borrower in September of 2023 for $250,000. He has had zero late payments.

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.

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 35.4k 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).

PROPERTY INFORMATION

The subject property is located approximately 0.75 miles west of I-5 in the city of Marysville. The subject property is located approximately 0.75 miles west of I-5 in the city of Tulalip. The appraiser lists the property address to be in the city of Tulalip, however that is incorrect. The property is located in the city of Marysville. 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 subject property consists of a 7.51-acre parcel that is rectangular in shape. The surrounding area is a typical suburban neighborhood, consisting mostly of detached single-family homes with small scale agriculture mixed in and commercial use properties clustered along busy neighborhood arterials.

The site is improved with a 1.5 story single-family residence. The building has 1,610SF and was built in 1935. It contains 2 bedrooms and 1 bathroom and is equipped with a crawl space, concrete foundation walls, wood exterior walls and a composite shingle roof. It also has an open deck area, a porch and wooden fencing. There are a total of 12 buildings on the subject property which includes a detached shop, 2 detached garages, a storage building, 2 large plastic greenhouses and 3 additional lighter material greenhouses totaling over 5,800SF.

The subject site is partially impacted on wetlands and associated buffers along the south west side of the parcel. These wetlands do not impact the building improvements, which have been constructed on the northern portion of the site, outside of the buffer area. These wetlands have no adverse impact on the subject property, which is already built up and cannot be expanded. Overall, wetlands impact roughly 10% of the total site area based on aerial estimates.

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. It should be noted that this property is legal, nonconforming due to the property being under 10 acres, while being zoned agricultural.

Our original loan included cash out for rehab on the property, which was to expand the subject property by about 800SF. The cash out will go towards finishing out the remaining work to be done, which includes septic system replacement and related property upgrades.

The property is leased to the former seller for $7,600 per month and lease expires in March of 2030. They plan to either flip the property upon expiration of the current lease. If market conditions improve exponentially, they will flip prior to the expiration of the leases. The tenant uses this property for his microgreen business. He is the former owner of the property who sold it to our borrower.

BORROWER SUMMARY

Title to this property is held by a corporation, of which the guarantor is 100% owner. This entity was formed in February of 2023 and specializes in agriculture. It reported a net business loss of ($211,547) in 2024 and ($14,550) in 2023.

GUARANTOR SUMMARY

Our guarantor is a single man who owns multiple businesses and will be providing a personal guarantee on this loan. He has a mid-credit score of 639 and self-reported a net worth of $7,825,279.05. He reported adjusted gross income of $96,056 in 2024 and $78,923 in 2023.

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 borrower’s tech company, meaning that no cash was exchanged when the borrower assumed ownership of the property.

The guarantor’s tech company will be providing a corporate guarantee on this loan. This entity is also owned 100% by the guarantor and specializes in AI software services. It was formed in January of 2020 and reports a net business income of $151,712 in 2025 and ($162,289) in 2024.

We accepted an appraisal that was ordered by a local bank. This appraiser provided an (AS-IS) value of $895,000.

At a 10.0% yield to investors and a 44.7% 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.

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 of hitting bottom, values reached new highs. During the Dot-Com Meltdown, commercial real estate fell by 45%. Within three years of hitting bottom, values reached new highs. During the Great Recession, commercial real estate fell by 45%. Within three years of hitting bottom, 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 Justine Smith
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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