Bethel OH Daycare Purchase

George says: "This is a superb hard money loan. The loan amount is small (hugely important), and our borrowers have good credit. It is also a purchase money loan, so the purchase price has been established in the open market (as opposed to based on just the appraiser’s best estimate). Lastly, our borrowers are putting down some decent cash. I love this deal. If you have never invested in trust deeds before, I urge you to take a $10,000 to $25,000 piece of this loan.”

“The ownership of this first mortgage will be in your own name, rather than in the name of some fund. “Robert and Marry Smith, husband and wife, as to an undivided 7.3% interest.” Direct ownership is immensely less risky."

Blackburne & Sons is pleased to present this purchase money first mortgage secured by 2,304SF commercial building on a 1.795-acre parcel, located in Bethel, Clermont County, Ohio.

The purpose of this loan is to purchase the subject property in the amount of $255,000.00. The borrower will be coming to closing with approximately $89,250, plus closing costs.

COUNTY INFORMATION

Clermont County, popularly called Clermont is a county in the U.S. state of Ohio. As of the 2020 census, the population was 208,601. Ordinanced in 1800 as part of the Virginia Military District, Clermont is Ohio's eighth oldest county, the furthest county west in Appalachian Ohio, and the eleventh oldest county of the former Northwest Territory. Clermont County is part of the Cincinnati, OH-KY-IN Metropolitan Statistical Area. The county is named from the French "clear hills or mountain." Its county seat is Batavia, while its largest city is Milford.

Aviation is served by the Clermont County Airport. Clermont's newspapers are the Clermont Sun, positing historical stories and statistics, and the Community Press papers. According to the county's 2021 Annual Comprehensive Financial Report, the top employers in the county are: Total Quality Logistics, American Modern Insurance Group, Clermont County and Mercy Hospital. Clermont County has the Cincinnati Nature Center at Rowe Woods and Valley View Nature Preserve, both in Milford, and oversees five parks, three nature preserves, a hiking/biking trail, and several green spaces, encompassing over six-hundred acres. Clermont is the location of East Fork State Park and Stonelick State Park, and benefits from the Clermont Public Libraries.

CITY INFORMATION

Bethel is a village in Tate Township, Clermont County, Ohio, United States. The population was 2,620 at the 2020 census. Bethel was originally called Plainfield, and under the latter name was platted in 1798. The town site was replatted in 1802 under the name Bethel. The present name is after Bethel, a city in the Hebrew Bible. A post office in Bethel has been in operation since 1815. According to the United States Census Bureau, the village has a total area of 1.41 square miles, of which 1.40 square miles is land and 0.01 square miles is water.

In 2021, the median property value Bethel, OH was $ 130,500, with a home ownership rate was 50.6%, and the median household income was $40,625. The economy of Bethel, OH employs 975 people. The largest industries in Bethel, OH are Retail Trade (196 people), Manufacturing (193 people), and Health Care & Social Assistance (123 people), and the highest paying industries are Finance & Insurance ($80,750), Public Administration ($58,750), and Educational Services ($45,417). The largest universities in N/A are Brown & Clermont Adult Career Campuses (101 degrees awarded in 2022).

SUBJECT PROPERTY DETAILS

The subject site consists of one parcel that is 1.795 acres. To the east of the subject property there is farm land, to the north an office property and to the south a retail center. The site is zoned as a C-1, commercial district and is irregular in shape and generally level in topography. The subject site is improved with asphalt paving, concrete walkways, signage and miscellaneous landscaping. It is equipped with 16 marked parking spaces, as well as Electric, water, septic sewer system.

The subject property is improved with a 2,304SF office building. The improvements consist of a single-story house that was built in 1955 and has since then been converted into an office. There is an attached garage that has been converted to office area and an unfinished partial basement that is not included in the above square footage. Additionally, the property has a fenced in backyard and there is a shed in the rear of the building that does not contribute any value. The interior finish includes hard wood, tile and sealed concrete floors, painted drywall walls and painted drywall and acoustic tile ceilings.

The property has been recently updated (2023) with new HVAC, refinished floors, paint, and countertops. It should be noted that there are oil tanks in the basement because prior to 2023 it was oil heat. The tanks are currently empty and the borrower has plans to removed the tank post-closing. We will not be requiring the removal of the oil tank, nor will we be checking to ensure its removal. The current owner/tenant has already vacated the property and our borrower has a 10 year lease already signed with Guardian Angel Daycare for $4k per month in rent.

BORROWER SUMMARY

Our guarantors are a married couple who will hold title through a newly formed Limited Liability Company (real estate holding company) of which the wife is 100% owner and sole member. Both husband and wife will be providing a personal guarantee on our loan. The entity that will be on title was formed this year (2024) so it does not have any tax returns yet.

The wife works as a senior bookkeeper for an accounting firm and the husband works as a maintenance supervisor for a fabrication / welding company and also has his own weld shop that he runs from their home.

Their personal tax returns show adjusted gross income of $155,583 in 2023 and $151,363 in 2022. They self-reported a net worth of $1,339,476 and have mid credit scores of 708 and 674.

Our borrowers plan on renting out the property to a daycare business and the property is already outfitted for this use.

VALUATION SUMMARY

We hired an MAI appraiser who gave this property an (AS-IS) Appraised Value of $260,000. We also engaged a local broker to complete a Broker’s Price Opinion who valued the property at $298,967.

At a 10.0% yield to investors and a 63.8% LTV (AS-IS APPRAISED VALUE), and 65.0% LTV (PURCHASE PRICE) 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 © 2024 Blackburne & Sons Realty Capital Corporation. All rights reserved. (800) 606-3232