Chicago Funeral Home Refinance

George says: "Unless people stop dying, the world will always need funeral homes."

Blackburne & Sons is pleased to present this First Trust Deed secured by a 2-story, 7,136SF funeral home with two (2) second floor apartments on 0.34-acres, located in Chicago, Cook County, IL.

The purpose of this loan is to pay off the current first for $260,000 and a vehicle loan of $16,974. The borrower will be bringing approximately $20,000 cash to closing, not including closing costs.

Cook County is the most populous county in the U.S. state of Illinois and the second-most-populous county in the United States, after Los Angeles County, California. More than 40 percent of all residents of Illinois live within Cook County. As of 2020, the population was 5,275,541. The county seat is Chicago, the most populous city in Illinois and the third most populous city in the United States. The county is at the center of the Chicago metropolitan area.

In 2022, the median property value in Cook County, IL was $293,700, with a home ownership rate of 57.5%, and the median household income was $78,304. The largest universities in Cook County, IL are Northwestern University (9,725 degrees awarded in 2022), University of Illinois Chicago (8,607 degrees), and University of Chicago (7,328 degrees). The economy of Cook County, IL employs 2.6M people. The largest industries in Cook County, IL are Health Care & Social Assistance (358,958 people), Professional, Scientific, & Technical Services (286,892 people), and Educational Services (247,912 people), and the highest paying industries are Mining, Quarrying, & Oil & Gas Extraction ($103,393), Utilities ($93,185), and Professional, Scientific, & Technical Services ($88,223).

Chicago is the most populous city in the U.S. state of Illinois and in the Midwestern United States. With a population of 2,746,388, as of the 2020 census, it is the third-most populous city in the United States after New York City and Los Angeles. Chicago is the center of the Chicago metropolitan area, often colloquially called "Chicagoland" and home to 9.6 million residents.

Located on the shore of Lake Michigan, Chicago was incorporated as a city in 1837 near a portage between the Great Lakes and the Mississippi River watershed. The city is an international hub for finance, culture, commerce, industry, education, technology, telecommunications, and transportation. It has the largest and most diverse finance derivatives market in the world, generating 20% of all volume in commodities and financial futures alone.

O'Hare International Airport is routinely ranked among the world's top six busiest airports by passenger traffic, and the region is also the nation's railroad hub. The Chicago area has one of the highest gross domestic products (GDP) of any urban region in the world, generating $689 billion in 2018. Chicago's economy is diverse, with no single industry employing more than 14% of the workforce.

Chicago is a major destination for tourism, including visitors to its cultural institutions, and Lake Michigan beaches. Chicago's culture has contributed much to the visual arts, literature, film, theater, comedy (especially improvisational comedy), food, dance, and music (particularly jazz, blues, soul, hip-hop, gospel, and electronic dance music, including house music). Chicago is home to the Chicago Symphony Orchestra and the Lyric Opera of Chicago, while the Art Institute of Chicago provides an influential visual arts museum and art school.

SUBJECT PROPERTY DETAILS

The subject is located in the far Chicago south side neighborhood of Riverdale, which is primarily residential in nature, with commercial development along its main thoroughfares which include Leyden Avenue, 138th Street and Indiana Avenue. Primary access to the neighborhood via car and truck is from the Bishop Ford Expressway which has a full interchange along Sibley Boulevard 2+- miles southeast of the site. Neighboring land uses consist of a mainly single-family homes and multi-family apartment buildings. Commercial facilities are located along the major thoroughfares.

The subject property consists of a 0.34-acre parcel that is level in topography and triangular in shape. All normal utilities including sewer, water, gas, electricity, cable television and telephone are available to the site.

The site is improved with a two-story, 7,136SF building that is roughly 88 years old and a 2-car garage. The building has a concrete foundation, masonry exterior walls and a rubber and shingle type roof. The first floor is comprised of a funeral parlor, complete with a viewing area, two bathrooms, reception area, offices and an unfinished storage area along the west elevation. There is also a partial basement that is used for embalming and refrigeration. The second floor has two apartment units. Both units are equipped with two bedrooms, one bathroom, living room, kitchen and dining room. It should be noted that these apartments are not leased, but rather currently used by our borrowers for resting during late night operations. The borrowers have owned the property for 6 years.

The borrowers are a married couple who hold title to the property through a corporation; of which he is the president. Both husband and wife will be providing personal guarantees on our loan. In addition, the operating entity will be providing a corporate guarantee. The borrowing entity was formed in 2023 and reports its income through the borrower’s personal tax returns. We were provided a profit & loss statement showing an income of $250,544.11 through October of 2024.

The operating entity (corporate guarantor) was formed in 2017. It reported a net business income of $190,546 in 2023 and $261,252 in 2022. He is 51% owner and she is 49% owner of this entity.

Our guarantors are a married couple who both work in the funeral home business. They self-reported a net worth of $271,745 and have mid-credit scores of 643 and 480. The reason for the wife's poor credit is the debt that was incurred during their separation. This loan will be paying off some of their debts to help their cash flow by roughly $630 per month. It should be noted that borrowers filed their tax returns separately because they had been separated. However, they have currently reconciled and are no longer separated. His tax returns show an adjusted gross income of $27,382 in 2023 and $16,111 in 2022. Her tax returns show an adjusted gross income of $17,366 in 2023 and $12,252 in 2022.

We hired a local MAI appraiser who valued this property at $595,000 (AS-IS). We also hired a local broker who performed a drive-by opinion of value (BPO) and valued this property at $350,000.

At an 12.0% yield to investors and a 48.7% 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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