Hank's Franks Texas Wieners

Blackburne & Sons is pleased to present this Purchase Money First Mortgage secured by a 580SF hotdog restaurant on a 3,497SF lot, located in Lodi, Bergen County, New Jersey.

The guarantors are purchasing the subject building and business for $500,000 from our guarantor’s father/father-in-law. The father has provided a gift of equity in the amount of $150,000 to be used as a down payment, plus providing a seller concession of $38,000 to cover closing costs.

The subject business has been known as “Hank’s Franks Texas Wieners” and has been in business since 1959. Our buyers are keeping the name of the business since it is so well-known and the sellers will be staying to help in the transition of ownership.

Bergen County is the most populous county in New Jersey with a population of 955,732, as of the 2020 United States census. Located in the northeastern corner of New Jersey and its Gateway Region, Bergen County and its many inner suburbs constitute a highly developed part of the New York City metropolitan area. The county borders the Hudson River; the George Washington Bridge, which crosses the Hudson and connects Bergen County with Manhattan.

The county is divided into 70 municipalities; 2 villages, 3 cities, 9 townships, and 56 boroughs. Its most populous place, with 46,030 residents is Hackensack, which is also its county seat. In 2015, the county had a per capita personal income of $75,849, the fourth-highest in New Jersey and 45th highest among the nation's 3,113 counties. Bergen County is one of the wealthiest counties in the United States, with a median household income of $81,708 per the 2010 Census, which was almost 18% higher than the $71,919 median statewide. The county is one of the most expensive counties in the state, with a median home price in 2022 exceeding $600,000. The county's park system covers more than 9,000 acres.

Lodi Borough is in the southwestern portion of Bergen County, just south of I-80. Covering an area of just 2.285 square miles, the borough is bordered to the north by Maywood; Hackensack and South Hackensack to the east, Hasbrouck Heights to the south and; Garfield and Saddle Brook to the west. With the exception of Hackensack, which is more urban in nature, all of the surrounding communities exhibit similar suburban characteristics as Lodi, with convenient access to major arteries and strip retail development.

Lodi is a densely developed suburban community situated within the southwestern portion of Bergen, offering a modestly priced housing base by Bergen County standards and fairly palatable commuting patterns to employment centers located throughout the county as well as Manhattan. State Highway 46 is within immediate proximity of the borough and easily accessible, linking the borough to employment as well as major shopping destinations. The borough maintains a stable tax base, with a sizable portion of its taxes generated from commercial and industrial properties.

Based on CoStar's research, there appears to be about 4 projects that have been recently developed, all of these projects are perceived to be within 1.0 mile of the subject. The range in size of developments is 4,872SF to the largest development of 200,385SF. Overall, the average size of recent developments in the area is 116,161SF.

The subject property consists of a 580 SF hotdog stand known as Hank’s Franks that was built in 1964. The building is wood framed and features a service counter, full service kitchen, and two (2) restrooms. The building is in overall average condition. The property is located on a 3,497SF parcel located on the eastbound side of Route 46 at the corner of Cark Street. The estimate for the current 2023 population within the subject neighborhood’s 3 mile radius is 253,629 representing a 0.86% change since 2020.

The site consists of two parcels with a total site area of 3,497SF (0.08 AC) which is based on information obtained from Lodi Borough and Hasbrouck Heights Borough Tax Map. It is perceived that there is no surplus or excess land at the subject. The subject property features limited on-site parking however is located adjacent to a parcel of land owned by the state of New Jersey. According to the property representative they have utilized this area for additional parking historically however have no legal right to the area.

The land use in the subject’s immediate neighborhood consists of a significant amount of commercial property, comprising of a mix of many property types. Commercial uses in the area include the multi tenant retail centers, medium-sized retail/industrial/distribution-type properties, small- to- medium sized freestanding office and retail properties, as well as service-related uses, restaurants, gas stations/convenience stores and banks.

The seller provided tax returns for the subject business which shows $110,123 in net income for 2022. The tax returns provided from the seller for the business for 2021 reports $89,941 in net income.

Our guarantors are husband and wife and will hold title through a newly formed LLC. Both will provide a personal guarantee on our loan. The husband currently works at the subject property and runs the day-to-day business activities, and the wife runs her own successful tutoring business. They own another commercial building worth $2,400,000 and only owe $600,000 on it.

The borrowers have a self-reported net worth of $1,686,454 and have mid-credit scores of 699 and 701. Their 2022 personal tax returns reported adjusted gross income of $388,114, and in 2021 their personal tax returns reported $156,932 in gross income.

We engaged a local MAI appraiser who valued this property at $500,000. We also engaged a local broker who performed an opinion of value which came in at $500,000.

At a 10.0% yield to investors and a 70.0% LTV (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.

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
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