N. Lincoln Blvd. Commercial

Blackburne & Sons is pleased to present this first mortgage secured by a 3,339SF commercial building on a 20,574SF parcel located in Oklahoma City, Oklahoma.

Proceeds from this loan will go towards paying off a note that matured in January 2023 in the amount of $249,000. The rest of the proceeds will cover closing costs and insurance, leaving a small amount of cash at closing.

Oklahoma County is located in the central part of Oklahoma, at the heart of the Oklahoma City Metropolitan Statistical Area. As of the 2010 census, the population was 718,633, making it the most populous county in Oklahoma. The county seat is Oklahoma City, which is the state capital and largest city. Adjacent counties include Logan County (north), Lincoln County (east), Cleveland County (south), Canadian County (west).

The county is one of seven counties in the United States to share the same name as the state it is located in and the only one of the seven to contain the state capital, and one of two to contain a city of the same name as well. According to the U.S. Census Bureau, the county has a total area of 718 square miles, of which 709 square miles is land and 9.6 square miles (1.3%) is water. As of the Census of 2010, there were 718,633 people, 277,615 households, and 172,572 families residing in the county. The population density was 1,013 people per square mile and there were 319,828 housing units at an average density of 416 per square mile.

Oklahoma City is the capital and largest city of Oklahoma, it ranks 20th among United States cities in population and is the 8th largest city in the Southern United States. The Oklahoma City MSA had a population of 1,396,445, and the Oklahoma City–Shawnee Combined Statistical Area had a population of 1,469,124, making it Oklahoma's largest municipality and metropolitan area by population. Oklahoma City is on the I-35 Corridor, one of the primary travel corridors south into neighboring Texas and Mexico and north towards Wichita and Kansas City.

Between 2019 and 2020 the population of Oklahoma City grew from 1.38M to 1.4M, and its median household income grew from $59,084 to $60,476. The largest universities in Oklahoma City are University of Oklahoma-Norman Campus (7,400 degrees awarded in 2020), University of Central Oklahoma (3,100 degrees), and Oklahoma City Community College (1,944 degrees).

In 2020, the median property value in Oklahoma City, OK was $162,600, and the home ownership rate was 64.4%. Oklahoma City has one of the world's largest livestock markets. Oil, natural gas, petroleum products, and related industries are its economy's largest sector. The economy of Oklahoma City employs 671k people with the largest industries being Health Care & Social Assistance (89,661 people), Retail Trade (79,919 people), and Educational Services (60,764 people), and the highest paying industries are Mining, Quarrying, & Oil & Gas Extraction ($75,096), Utilities ($69,289), and Agriculture, Forestry, Fishing & Hunting, & Mining ($64,996).

The subject site is situated at the Southwest corner of NE 38th Terrace and North Lincoln Blvd. The subject property is currently an existing commercial building and land. The site is a regular tract of reportedly 20,574SF, with a total of 3,339SF of rent able building area in an existing 1-story commercial building constructed in Circa 1970.. The site includes concrete drives and parking areas and minimal landscaping. It has a reinforced concrete foundation, wood framing and brick veneer exterior walls.

The borrower purchased the subject property for $520,000 in 2020 with a down payment of $250,000. The property was previously a restaurant property. The borrower did some rehab to the property and turned it into two units. He spent approximately $147,000 in new floors, paint, and electricity and updated the bathrooms. It is now Unit A & B. One of the units is occupied by a cannabis processing lab and pays $2,700 per month in rent. The other unit is owner-occupied and is used as a cannabis dispensary that produces edible products. This business just started operating in early 2022, and also pays $2,700 per month in rent.

The borrower is a single man and holds title to the property through a limited liability company, of which he is 100% owner. This LLC is the real estate holding company. Our borrower will provide a personal guarantee on this loan.

The borrower is an entrepreneur and owns multiple properties and businesses. He has a mid-credit score of 664 and reports a net worth of $701,370. He owns an entertainment business that produces cartoons and children’s products, owns an assisted living facility, as well as a cannabis business and edibles business.

His personal tax return for 2021 reports adjusted gross income of $13,655. It should be noted, that on his Sch C two of his entities reported $129,310 in depreciation when added back in his total income would be $142,965. In 2020 his personal tax return reported $93,992.

In 2021, the borrower’s cannabis entity reported net income of $15,317, and in 2020 it reported a loss of $44,593. However, the borrower provided a 2022 profit & loss statement through August 2022 reporting net income of $360,231.

We hired a local Certified General appraiser who valued this property (AS-IS) appraised value of $460,000. A local broker was also engaged who performed a drive-by opinion of value (BPO) who values this property at $510,000.

At an 11.0% yield to the investors and a 65.0% LTV (AS-IS) 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.

THE LOAN OFFERED HEREBY IS A CANNABIS LOAN THAT WILL BE SECURED BY A PROPERTY UTILIZED TO GROW, MANUFACTURE, PROCESS, DISTRIBUTE OR DISPENSE CANNABIS OR CANNABIS RELATED PRODUCTS. THIS LOAN INVOLVES SIGNIFICANT ADDITIONAL RISKS NOT ATTRIBUTABLE TO LOANS UNRELATED TO THE CANNABIS INDUSTRY AND SUCH LOANS ARE NOT SUITABLE FOR ALL INVESTORS. POTENTIAL PURCHASERS OF FRACTIONAL INTERESTS IN THIS LOAN MUST REVIEW AND UNDERSTAND THE INFORMATION SET FORTH IN THE OFFERING CIRCULAR ENTITLED "ADDITIONAL RISKS AND CONSIDERATIONS OF CANNABIS RELATED LOANS" PRIOR TO INVESTING. PURCHASERS OF INTERESTS IN THIS LOAN SHOULD ALSO CONSULT THEIR OWN LEGAL COUNSEL AND INVESTMENT ADVISORS WITH RESPECT TO THESE RISKS TO DETERMINE IF AN INVESTMENT IN THIS LOAN IS APPROPRIATE FOR THEIR PARTICULAR RISK TOLERANCE PROFILE AND FINANCIAL SITUATION.

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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