Gaston NC Industrial Refinance

George says: "This is a very attractive hard money loan. The subject property is an industrial building. Industrial is one of the healthiest of all of commercial property types. The loan is small. The property is pretty. Lastly, the loan-to-value is just 50%."

Blackburne & Sons is pleased to present this first trust deed secured by 4,185SF retail flex building on a 1.24-acre parcel, located in Gaston, Northampton County, North Carolina.

The purpose of this loan is to bring the property taxes current ($64,000), payoff a judgment ($8,300), payoff a future advance deed of trust ($6,200), closing costs, prepay one year of property insurance. The remaining funds will serve as working capital for development projects for the borrower’s construction business.

COUNTY INFORMATION

Northampton County is a county located in the U.S. state of North Carolina. As of the 2020 census, the population was 17,471 and its county seat is Jackson. Northampton County is part of the Roanoke Rapids, NC Micropolitan Statistical Area, which is also included in the Rocky Mount-Wilson-Roanoke Rapids, NC Combined Statistical Area.

According to the U.S. Census Bureau, the county has a total area of 550.56 square miles, of which 536.70 square miles is land and 13.86 square miles (2.52%) is water. Its state and local protected areas include Lake Gaston Public Recreation Area (part), Roanoke Rapids Lake Day Use Area (part) and Upper Roanoke River Wetlands Game Land (part). Northampton county is approximately 1.5 hours northeast from Raleigh, NC.

CITY INFORMATION

Gaston is a town in Northampton County, North Carolina, United States. The population was 1,152 at the 2010 census. It is part of the Roanoke Rapids, North Carolina Micropolitan Statistical Area. The Gaston School was listed on the National Register of Historic Places in 2012. The elementary and middle schools serving Gaston are Gaston Elementary and Gaston Middle. The high school serving Gaston is Northampton County High School. Also located in Gaston is KIPP Pride High School, a charter school part of the Knowledge is Power Program commonly known as KIPP.

In 2022, the median property value in Gaston, NC was $73,900, with a homeownership rate of 49.3%, and the median household income was $34,934. The economy of Gaston, NC employs 283 people. The largest industries in Gaston, NC are Health Care & Social Assistance (59 people), Accommodation & Food Services (47 people), and Retail Trade (32 people), and the highest paying industries are Public Administration ($47,188), Manufacturing ($42,875), and Construction ($40,833).

SUBJECT PROPERTY DETAILS

The subject property is located on the east side of Roanoke Rapids Road aka NC Highway 48, which runs north and south. Irregular in shape, the site is comprised of 1 parcel of land 1.24-acres or 54,014SF. The topography of the site is rolling and above Roanoke Rapids Road grade. The site has all city services available including public water and sewer, street lighting, trash removal, cable vision, electricity, natural gas, telephone service, etc. The site is professionally landscaped with grass and decorative plantings and is equipped with a 14-space asphalt parking lot.

The subject is improved with a 4,185SF mixed-use brick flex building that was built in 2009. The building has a 1,935SF office at the front and a 2,250SF warehouse/workshop at the rear, making it 54% warehouse.

The building is equipped with a concrete slab foundation and a gable roof with wood decking and metal seam roofing. The building is fully insulated. The office section exterior is brick veneer with fixed insulated windows at the front and sides. The warehouse exterior is 22 gauge painted corrugated steel sheeting. The front door is metal framed with full-length glass insert. The building has two 10-foot motorized roll up doors into the warehouse/shop area. The building is equipped with two gender specific restrooms in the office and one in the warehouse area.

The borrower purchased the land in 2008 for $79,000. He then erected the building, which is currently occupied by the borrower’s business. It should be noted that the borrower prioritized the growth of his business over paying the property taxes and, as a result he is about 10 years behind. ALL of which will be getting paid at closing.

BORROWER SUMMARY

Our borrower is a married man who holds title to the property through an LLC of which he is 100% owner. His wife will not be on the loan and will not provide a personal guarantee. The entity on title was formed in March of 2016 and it reports its income through the borrower’s personal tax returns on a Schedule C. In 2023, the business reports a net income of $48,705, and once you add back deprecation, his net income was $54,313. In 2022, the business reported $14,728, and after add-backs the net income was $151,523. The borrower provided a 2024 YTD P&L showing $220,538 in net income as of July 2024. The increase in net income is due to a new large project working with a non-profit organization.

The guarantor works as a general contractor and is self-employed. He self-reported a net worth of $1,251,402 and has a mid-credit score of 542. A detailed letter of explanation regarding the borrower’s credit is available in our due diligence package. The borrower shows an adjusted gross income of $45,264 in 2023 and $13,687 in 2022 on personal tax returns.

VALUATION SUMMARY

We hired an MAI appraiser who valued this property with an AS-IS value of $370,000.

A local broker was also engaged who performed a drive-by opinion of value (BPO) and valued this property at $483,600.

At an 11.0% yield to the investors and a 50.0% 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
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