Rainsville AL Mobile Home Park II PPM

George says: "The thing about mobile home parks is that people always need a place to live. This is especially true now that apartment rents (the competition) have risen through the roof. There are also lot of small units, as opposed to a property with a single, large tenant. Lastly, this is a small loan. Small loans have small payments."

Blackburne & Sons is pleased to present this first mortgage secured by a 30-lot mobile home park on 15.07-acres, located in Rainsville, DeKalb County, Alabama.

The purpose of this loan is to pay off the current Blackburne and Sons loan on the property in the amount of $242,000, and to provide cash out to re-pave the roads. It should be noted, we are not holding back funds for this. The roads are actually public roads, so the borrower is jumping through hoops to see if he can get permission to pave these roads. He did speak with the mayor and has to attend committee meetings to get the roads on the schedule. If they are not able to pave the roads with the cash out, the funds will be used to purchase new mobile homes for the park.

Blackburne & Sons made a loan on this property in 2019 for the purchase of the property. It is now up for its 5 year call option. They have been late on some payments, but never more than a week late. They have always paid their late fees and are current on payments and property taxes.

COUNTY INFORMATION

DeKalb County is a county located in the northeastern part of the U.S. state of Alabama. As of the 2020 census, the population was 71,608. Its county seat is Fort Payne, and it is named after Major General Baron Johann de Kalb. DeKalb County is part of the Huntsville-Decatur-Albertville, AL Combined Statistical Area. According to the United States Census Bureau, the county has a total area of 779 square miles, of which 777 square miles is land and 1.6 square miles (0.2%) is water. Stone Mountain lies near the eastern border of the county. Soapstone Ridge, parallel to the southern border, was heavily quarried between 1400 and 100 BC and objects made from the soapstone have been found as far away as the Great Lakes.

As of the census of 2010, there were 71,109 people, 26,842 households, and 19,361 families living in the county. The population density was 92 people per square mile. There were 31,109 housing units at an average density of 39.9 units per square mile. As of the 2020 United States census, there were 71,608 people, 24,880 households, and 16,366 families residing in the county.

CITY INFORMATION

Rainsville is a city in DeKalb County, Alabama, United States. At the 2010 census the population was 4,948, up from 4,499 in 2000. Rainsville is located on top of Sand Mountain, a southern extension of the Cumberland Plateau. Rainsville is located northwest of the center of DeKalb County and it is bordered to the northeast by Sylvania, to the northwest by Powell, to the southwest by Shiloh, and to the southeast by Pine Ridge. Alabama State Routes 35 and 75 intersect in the center of town. AL 35 leads northwest 19 miles to Scottsboro and southeast 9 miles to Fort Payne, the DeKalb County seat. AL 75 leads northeast 10 miles to Henagar and southwest 26 miles to Albertville.

In 2022, the median property value in Rainsville, AL was $187,800, with a homeownership rate of 81.5%, and the median household income was $60,339. The largest industries in Rainsville, AL are Manufacturing (558 people), Information (367 people), and Educational Services (320 people), and the highest paying industries are Educational Services ($53,889), Professional, Scientific, & Technical Services ($53,571), and Manufacturing ($42,143).

SUBJECT PROPERTY DETAILS

The subject property is a mobile home park comprised of 30 mobile home pads on a + 15.07-acre site, located along Estate Drive in the town limits of Sylvania, DeKalb County, Alabama.The site is L shaped and the topography is gently rolling.

The subject property is located in the Sylvania town limits, but has a Rainsville, Alabama address. Sylvana is included in the Fort Payne Micropolitan Area. Fort Payne is located approximately 100 miles northeast of Birmingham and approximately 55 miles southwest of Chattanooga, Tennessee. Fort Payne has good access via a combination of interstate highways, state and local roads. Interstate highway 59 runs through the northern part of Fort Payne with access from Exits 218, 222 and 224. U.S. Highway 11 and Alabama Highway 35 are the major traffic and commercial arteries in the area. The area has access to rail service and the area is served by the Isbell Field-4A9 Airport.

The park has asphalt paved streets and gravel/dirt pads and parking areas. Sewage disposal is via on-site septic tank systems. The park has no common amenities and was constructed in the mid-1970’s. The pads are currently rented for $200 - $530 per month. There are 29 pad-only rentals and one park owned home. Current occupancy is at 86.67% as there are 4 vacant units.

The mobile homes are reported to be over 20 years old. All mobile homes are tenant owned aside from one park owned home. The park owned home is currently vacant and in need of repair. We are not securing this mobile home with our loan. The borrower’s long-term plans are to add new mobile homes to the vacant lots and increase rents.

BORROWER SUMMARY

The guarantors are two single men who hold title to the property via a limited liability company. The LLC holding title was formed in 2019 and the guarantors are each 50% owners. We were provided the entity’s tax returns which show a net loss of $4,047 in 2023 and $17,322 in 2022. We were also provided a 2024 profit & loss statement which shows a net business income of $12,898 as of July 2024.

Guarantor #1 works as a salesman for a graphics design company and self-reported a net worth of $1,167,343. His credit report shows a mid-credit score of 785. His 2023 personal tax return reports $132,133 in adjusted gross income and his 2022 personal tax return reports $89,215 in adjusted gross income.

Guarantor #2 works as a property manager for a consulting company and has a mid-credit score of 739. He self-reported a net worth of $920,480. His 2023 personal tax return reports $241,526 in adjusted gross income and his 2022 tax return reports $134,229 in adjusted gross income.

VALUATION SUMMARY

We hired a local MAI appraiser who valued this property with an AS-IS value of $530,000.

A local broker was also engaged who performed a drive-by opinion of value (BPO) and valued this property at $690,000.

This realtor also provided the following comments: This is a very large rural manufacturing home rental lot that is almost 100% occupied and is creating good income. The homes are older and will need replacing soon. Also the roads need resurfacing. It is in demand because there is very little small inexpensive rentals close.

At a 10.0% yield to the investors and a 59.4% 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.

ACCREDITATION STANDARDS

Please note this offering is a SEC Regulation D filing and will be done through a Private Placement Memorandum. In order to invest, you must be an accredited investor. Generally speaking, an accredited investor is an individual:

(a) whose individual income exceeds $200,000 in each of the past two years, with reasonable expectation of reaching the same going forward OR
(b) whose joint income with spouse exceeds $300,000 in each of the past two years OR
(c) your NET WORTH exceeds $1,000,000 (exclusive of your primary residence) OR

If you plan on investing through an entity, the entity can qualify if ANY of the following are met:

(a) all equity owners must be accredited OR
(b) any trust with more than $5,000,000 in assets OR
(c) ERISA with either $5,000,000 in assets OR a bank, insurance company, or registered investment advisor as it's trustee OR
(d) any self directed ERISA with an accredited investor(s) making the business decisions OR
(e) an IRA owned by an accredited investor

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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