Plymouth Road Trip Motel

Blackburne & Sons is pleased to present this First Trust Deed secured by a 6,716SF motel on 0.92 acres, located in Plymouth, Washington County, North Carolina.

The proceeds of this $420,000 loan will go towards paying off the first mortgage on the property in the amount $317,000, and to make $55,000 of improvements to the subject property. This loan will include an in-house holdback which will be used for the improvements.The proposed improvements are to upgrade the parking lot, add remote door locks, replace 7 showers, and to add natural gas lines to the main building.

The borrower’s current loan matured in February 2023. The lender stopped accepting payments and started the foreclosure process, so time is of the essence to close this loan.

Washington County is located in the state of North Carolina. As of the 2020 census, the population was 11,003. The county was formed in 1799 from the western third of Tyrrell County. It was named for George Washington. There are three incorporated towns in Washington County; Plymouth is the county seat, while other towns are Roper and Creswell. Washington County is known for rich farmland, extensive forests and abundant public access waters. The Roanoke River and Albemarle Sound form the northern boundary. Lake Phelps is 16,000 acres and is part of Pettigrew State Park in Creswell.

The county has a total area of 424 square miles, of which 348 square miles is land and 76 square miles (18%) is water. The county borders the Albemarle Sound and includes part of the National protected area of Pocosin Lakes National Wildlife Refuge.

Plymouth is the largest town in Washington County and is located on the Roanoke River about seven miles (11 km) upriver from its mouth into the Albemarle Sound in North Carolina's Inner Banks region. Domtar Paper Company, LLC., a paper manufacturer, had been the largest employer since 1937 up until roughly 2009. The town is now re-branding itself as a tourist destination and has built a riverfront boardwalk with views of the Roanoke River. Plymouth is home to the North Carolina Black Bear Festival, an annual three-day event at the beginning of June centered around bears.

In 2020, Plymouth had a population of 3,430 people with a median age of 43.1 and a median household income of $17,594. The median property value in Plymouth was $87,500, and the homeownership rate was 30.4%. The economy of Plymouth, NC employs 1,010 people. The largest industries in Plymouth, NC are Retail Trade (261 people), Manufacturing (163 people), and Other Services, Except Public Administration (136 people), and the highest paying industries are Transportation & Warehousing ($34,659), Transportation & Warehousing, & Utilities ($26,250), and Educational Services ($23,894).

The subject property is located on the southeastern side of US Highway 64, south of its intersection with NC Highway 32, within the town limits of Plymouth, NC. The total land area is 0.92 acres that is somewhat of a L shaped tract. The site includes approximately 202 linear feet of frontage along US Highway 64. Utilities to the subject site include electricity, water, sewer, and telephone service.

The subject site is improved with a one-story, limited-service motel that contains a gross building area of approximately 6,716SF, contained within two separate buildings. The property is currently operating as the Road Trip Motel and the facility was originally constructed in 1965.The hotel is equipped with 2 King rooms, 7 single rooms and 11 double rooms, for a total of 20 rooms. The common areas include the reception desk, lobby area, office area, employee break area, and laundry.The building also includes a storage area, full bathroom, as well as a separate area for the ice machine. The subject property includes various security cameras throughout the property.

The borrower is a single man who holds title through a Limited Liability Company, and will provide a personal guarantee on our loan. The LLC reports the subject property’s income through a Schedule C on the borrower’s personal tax returns.

Our guarantor is a realtor, fix & flipper, and developer, has a mid-credit score of 680 and reports a self-reported net worth of $970,800. Per his application, he owns five properties.

In 2022, his personal tax returns reported a loss of $243,410. This is due to a large amount of expenses on a Schedule C for his realty business. If you look at the subject property’s Schedule C for the Road Trip Motel, his income was $68,535. Once you add back depreciation, his net income for the motel was $75,225 for 2022.

In 2021, his personal tax returns report a loss of $197,937, however for the subject property only, he reported income of $6,103. Once you add back depreciation and interest, the net income for the motel was $17,088 for 2021.

The borrower provided a 2023 YTD profit & loss statement on the motel through June 2023, which reports net income of $30,409, after adding back mortgage interest.

We engaged a local MAI appraiser who provided an AS-IS valuation as well as an After Repair Valuation. The AS-IS value for the real estate only is $675,000 plus $35,000 in FF&E’s. The ARV for the real estate only is $735,000, plus $35,000 in FF&E’s.

We also engaged a local broker to perform a Broker’s Price Opinion and they valued the property at $450,000.

At a 11.0% yield to investors and a 62.2% (AS-IS) value and 57.1% LTV (ARV), 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
Publicly advertised to California residents only under California Department of Business Oversight business plan permit.
Return to C-Loans Home Page | Return to Blackburne & Sons Home Page
Copyright © 2022 Blackburne & Sons Realty Capital Corporation. All rights reserved. (800) 606-3232