Cherry Street Medical Office

George says: "The time to reach for a high yield is when real estate has crashed 45%. Go ahead and demand 12% to 14% interest. But when it's been 10 years or more since the last crash (its been 16 years now), smart trust deed investors settle for a lower yield in order to get into less risky deals."

Blackburne & Sons is pleased to present this purchase money First Trust Deed secured by a 2,800SF medical office building on a 0.66-acre parcel, located in Yadkinville, Yadkin County, NC.

The purpose of this loan is to purchase the subject property for $189,000. The borrower will be bringing $64,000 cash to closing, not including closing costs.

Yadkin County is a county located in the U.S. state of North Carolina. As of the 2020 census, the population was 37,214. Its county seat is Yadkinville. Yadkin County is included in the Winston-Salem, NC Metropolitan Statistical Area, which is also included in the Greensboro–Winston-Salem–High Point, NC Combined Statistical Area.

According to the U.S. Census Bureau, the county has a total area of 337.71 square miles, of which 334.94 square miles is land and 2.77 square miles (0.82%) is water. It is bordered by Surry, Forsyth, Davie, Iredell, and Wilkes counties. Yadkin County is located in the Piedmont region of North Carolina and in the northwestern portion of state, close to the Blue Ridge Mountains. The western portions of the county are hillier than the eastern portions, with part of the Brushy Mountains crossing into the northwestern section. It is within the Yadkin-Pee Dee River Basin, with the Yadkin River forming its northern and eastern borders.

Yadkinville is a town in Yadkin County, North Carolina, United States. The population was 2,995 at the 2020 census. Located in the Piedmont Triad, it is the county seat and most populous city of Yadkin County. According to the United States Census Bureau, the town has a total area of 2.7 square miles, all land.

In 2022, the median property value in Yadkinville, NC was $137,000, with a home ownership rate of 47.6%, and the median household income was $41,148. The economy of Yadkinville, NC employs 1.06k people. The largest industries in Yadkinville, NC are Manufacturing (270 people), Construction (184 people), and Health Care & Social Assistance (172 people), and the highest paying industries are Transportation & Warehousing, & Utilities ($66,193), Transportation & Warehousing ($66,000), and Public Administration ($63,000).

SUBJECT PROPERTY DETAILS

The subject is located on the corner of West Cherry Street and North Monroe Street in the Town of Yadkinville, within the Winston-Salem - NC USA metro area. Predominant land uses in the immediate vicinity of the subject are retail, office, institutional, and single-family residential. The subject site consists of a 0.66-acre rectangular corner lot, that is gently sloping on topography. It is equipped with an asphalt slab containing 15 unmarked parking spaces.

The site is improved with a 2,800SF office building that was built in 1973. The building is a single story, class C masonry construction with a concrete slab foundation, brick exterior walls and a metal roof.

The interior of the subject is equipped with carpet, laminate and tile flooring, wood paneling and exposed brick walls and fluorescent light fixtures. The interior layout consists of reception and administrative spaces, five exam rooms, five private offices, a kitchen and large break room, and two restrooms. The property is 100% leased to our borrower for $1,800 per month.

The borrower is a married man who will hold title to the property via a newly formed LLC; of which he is 100% owner. He will be providing a personal guarantee on our loan, however, his wife will not be a part of the loan and will not be providing a personal guarantee. It should be noted, however, that the wife works for the underlying business as a nurse / office manager. In addition, his medical practice will be providing a corporate guarantee on our loan. The borrowing entity was formed in October of 2024 and has not filed any tax returns yet.

The borrower is the owner and operator of an outpatient clinic and reported an adjusted gross income of $35,658 in 2023 and $19,942 in 2022. You might consider add backs of depreciation and rent when doing your own debt service calculations. He self-reported a net worth of $981,787 and has a mid-credit score of 706. The Corporate Guarantor reported its business income through the guarantor’s personal tax returns on a Schedule C for 2023 and 2022. He provided a 2024 Profit & Loss statement which reports net income of $289,894.

The borrower has been leasing the property from the seller since August of 2021 and has been making payments of $1,800 per month in rent. He plans to use our loan to exercise his option to purchase the property.

We hired an MAI appraiser who valued this property at $200,000 (AS-IS). We also hired a local broker who performed a drive-by opinion of value (BPO) and valued this property at $250,000.

At an 10.0% yield to investors and a 66.1% LTV (Purchase Price) and 62.5% LTV (AS-IS) 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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