Hudson River Road MHP

George says, "Small loans like this on small, non-prime properties have historically paid us pretty well (careful - past performance is no guarantee of future returns) - surprisingly even during great recessions, like the S&L Crisis, the Dot-Com Meltdown, and the Great Recession. I have seen expensive, beautiful properties go to foreclosure, while the mudders* in our portfolio kept plugging along. A mudder is a horse that runs well in wet or muddy conditions.”

Blackburne & Sons is pleased to present this new first mortgage secured by a 9-site mobile home park on a 2.4 acre parcel, located in Halfmoon, Saratoga County, New York.

Saratoga County is in upstate New York. As of the 2018 U.S. Census estimate, the county's population was 230,163, representing a 4.8% increase from the 2010 population of 219,607. This is reported to be one of the fastest growth rates in the northeastern United States and the fastest-growing county in Upstate New York. Saratoga County is included in the Capital District, encompassing the Albany-Schenectady-Troy, New York Metropolitan Statistical Area.

The town of Halfmoon has a population of 21,535 as of the 2010 census. The town is apparently named for the shape of the lower elevation land north of the junction of the Hudson and Mohawk Rivers. Halfmoon is in the southeast part of the county and is15 miles north of Albany. The most notable business in the area is Momentive's silicone plant, which is located in Waterford, just south of the subject property. This district also serves as home to several tenants in what was formerly a refrigeration storage complex for Grand Union. Immediately north of the former Grand Union warehousing facility, there are smaller businesses in the area including warehouses, retail, and gas stations/auto repair to name a few.

This mobile home park is in the southern portion of Saratoga County, in the Southeastern sector of the town of Halfmoon, just north of the town and village of Waterford. The immediate neighborhood, is roughly delineated by the Hudson River to the east, Lower Newton Road to the north, Button Road to the west, and the municipal boundaries with Waterford to the south.

According to Google Maps, there are three mobile home parks within a 5-mile radius of the subject property. Vacancy is estimated to be around 5%-10% and rental pricing in the area generally falls within the $300 to $600 range (plus utilities). This particular site is irregularly shaped but functional, with average utility. The topography is generally, level with some moderate sloping toward the north and west boundaries of the site.

The property’s improvements consist of gravel or dirt interior roadway, signage, landscaping, septic, and other miscellaneous site improvements. The park supports 9 pads, with one available lot for expansion. According to the real estate broker, most of the mobile homes are on concrete pads. There is a 1,120SF garage building with a wood exterior and shingle roof. Interior access was not provided, but it is assumed to be in fair condition based on exterior inspection. The building is not heated.Per the appraisal, there are 9 pads and a barn, of which 8 of the pads and the barn are rented. The scheduled gross monthly income is $3,020; $2,920 for the 8 pads and $100 for the barn. All pad leases are one-year that expire February, 2020. There is no formal lease agreement for the barn.

Title to the property will be held in the name of a New York limited liability company. This LLC was formed in 2015 and appears to have had no activity prior to this transaction. While we are obtaining a personal guarantee, it is important to note this borrower is a Canadian citizen. As a result, there may be limitations on our ability to collect on this personal guarantee. The individual has a mid-credit score of 625, and his stated net worth is $316,000. His income for 2017 $48,501 and 2016 was $58,897 (CAD). The borrower is purchasing the property for $199,054.80, plus closing costs, and is putting $64,175 as a down payment.

We engaged a local MAI appraiser who valued this property at $200,000. Per the appraisal, this valuation is subject to "the septic system is in working order and meets all necessary requirements for use". It is our understanding that no septic report has been completed as part of this purchase. We also engaged a local broker who performed an opinion of value, and valued this property at $190,000.

At an 10.0% yield to the investors and a 60.0% LTV Appraisal and 65.0% LTV Purchase Price, this appears to be a reasonable investment. Investing in any first mortgages 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. 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.

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.

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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