Loan Number: N2427
Loan Amount: $200,000
Minimum Investment: $10,000
Call for availability of smaller participations
Type: First Mortgage
Yield: 9.0%*

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Offering Circular
Loan Servicing Agreement
Audited Financial Statement for B & S
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PROPERTY

Project: EUCLID AVENUE OFFICE BUILDING
Property Address: 37903 Euclid Avenue, Willoughby, OH 44094
Description: The subject property consists of a 4,791SF freestanding office building on a 0.6628 acre lot, located in Willoughby, Ohio.

For an aerial view of this property...Click Here!

EUCLID AVENUE OFFICE BUILDING

George says, "This loan has some attractive features.  First of all, the loan size is small.  We love-love-love small loans.  Small loans have small payments.  Secondly, the borrowers have good credit.  Lastly, the net worth of the borrowers is more than five times the size of our loan.  Banks usually insist that the net worth of the borrower be at least as large as the loan amount; i.e., the Net Worth to Loan Size Ratio must be greater than 1.0.  Here we are, many multiples of that requirement.  I sure wish we could find more loans like this."

Blackburne & Sons is pleased to present this new first mortgage secured by a 4,791SF freestanding office building and a 2,392SF storage building on 0.6628 acres of land, located in Willoughby, Ohio.

Lake County is a part of the Cleveland Metropolitan Statistical Area which has a population of 2,055,612 spread across five counties. Its position on Lake Erie and proximity to Cleveland has made it a desirable home for entrepreneurs in the medical, electrical, adhesive products, and other industries. With 30 miles of shoreline on the lake, and two major rivers intersecting the county, Lake County offers an abundance of harbors and marinas to service the area for commercial transportation and recreational water activities. Lake County also offers many outdoor activities to its residents, with three State Nature Preserves and a park district comprised of 36 parks and over 8,000 acres.

The city of Willoughby sits towards the western end of Lake County and is a short 25-minute drive down I-90 to Cleveland. Settled in 1798 by David Abbot who operated a gristmill, the U.S. Census now reports an estimated population of 22,495 with a total 11,715 housing units. Top employers in the area include Lake Health employing over 600 people, the Willoughby-Eastlake City School District with 450 employees, and Ohio Presbyterian Retirement Service which employs 450. The downtown area has much historic architecture, benefiting from a period of renovation in the 1980’s. The local economy is regarded as stable and area as competitive with affordable living and abundant cultural and recreational opportunities making life in Willoughby comparable to more major urban areas.

The subject neighborhood is located in a densely populated area with convenient access to I-90, I-271, and SR-2 freeway providing quick routes west to downtown Cleveland, south to the eastern Cuyahoga County suburbs, or north to Lake Erie. While the immediate area is predominantly residential, US-20 is mainly fronted by commercial properties. Nearby businesses include Target, Giant Grocery, Regal Cinemas, Lowes, and Citizens Bank.

The subject property consists of a two-story building plus basement totaling 4,791SF and a 2,392SF storage building, located on a 0.6628 acre parcel. Originally built in 1857 as a residential dwelling, it now serves as an owner-occupied office building. The foundation of the main structure consists of reinforced concrete trench footing and concrete block/stone foundation walls. The building is frame with painted wood siding with double pane storm windows. It has a pitched, asphalt shingle roof with aluminum gutters and downspouts.

The interior features many restored, original finishes with painted plastered walls and ceilings, stained hardwood moldings, crown and floor moldings, hardwood flooring slats, and paneled wainscoting in the original portions of the building. Some of the offices have a higher mix of wallpapering and wainscot railing and replacement hardwood floors. The basement level is partially finished. The building is serviced by forced air heating and air conditioning units. Improvements to the site include average quality landscaping, asphalt drives, and 15-space parking area. There is also a two level barn/storage building constructed of wood timber frame and siding.

The property is mainly owner-occupied by the borrowers' business. They do heating and air conditioning consulting. There is also a small office unit rented out to an appraiser for $275 per month. There is no written lease as this tenant has been in the property for many years and it is now month-to-month. The borrowers are husband and wife and hold title to the property personally. They have mid-credit scores of 703 and 737, and they report a net worth of $1,347,537. Their personal net income for 2016 was $70,029, and $36,404 in 2015. The borrowers' business pays rent of $3,300 per month. In 2016, the borrowers' business reported a loss of $106,512, and reported net income of $127,906 in 2015.

This property is currently owned free and clear. The borrowers are refinancing to pay off almost all business debt, including credit cards. These will be paid directly at closing.

We engaged a local MAI appraiser who valued this property at $300,000. We also engaged a local broker who performed an opinion of value who valued this property between $275,000-$279,900.

At a 66.7% LTV and a 9.0% yield to the investors, this appears to be a 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 commercial properties almost always need to be renovated before they can be leased or sold, so be sure to maintain some liquidity.

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 -- NMLS Number 103430
Publicly advertised to California residents only under California Department of Business Oversight business plan permit.
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