Rockdale TX Land Development

George says: "A wise man might look at his loan on 14 homesites and think, ’This collateral is tangible and real. The stock market could plunge by 45%… and then another 25% nine months later. Bitcoin could fall 90%. Fortune 500 behemoths, like Intel, could go bankrupt. The dollar could become trash. But these 14 homesites will always have real value - 14 future homes for middle class Americans. And because I will own this property, along with my fellow investors, free and clear, the cost for us to carry it will be little more than real estate taxes."

Blackburne & Sons is pleased to present this First Trust Deed secured by 3.045-acres of land located in Rockdale, Texas.

The purpose of this refinance is to develop this 3.045-acre parcel of land into 14 individual residential lots. The horizontal improvements will cost a total of $195,000, and will be done in two draws. The first draw will be for $125,000 and the contractor will be paid directly out of escrow, at closing. Blackburne & Sons will holdback the remaining balance of roughly $70,000 with a 3rd party holdback company, and will release these funds directly to the contractor upon completion of the first phase. It is important to note that while the contractor is not a member of the borrowing entity, he is an intimate business partner of our borrower, and therefore is not considered an independent, 3rd party contractor.

Here’s a breakdown of these horizontal improvements: Land Clearing $4,900.50, Demo/Remove Structures $2,500, Grading $98,300, and Sanitary & Water $88,909.50, for a total of $194,610.

The subject property is currently free and clear of any liens or mortgages and property taxes are current. Our loan will include a partial release clause so that if the borrower sells off individual lots and pays the loan down, we can release individual lots from our loan.

Milam County is in east central Texas. Cameron, the county seat, is at the intersection of U.S. Highways 77 and 190 on the Atchison, Topeka and Santa Fe Railway, 60-miles northeast of Austin and 140-miles south of Dallas. Milam County is bordered by Robertson, Burleson, Lee, Williamson, Bell, and Falls Counties. According to the U.S. Census Bureau, the county has a total area of 1,022 square miles, of which 1,017 square miles is land and 4.8 miles is covered by water.

Population growth in Milam County grew by approximately 1,532 people over the past 10 years. Milam County had a 2022 population of 25,628, according to the U.S. Census Bureau.

Milam County’s total employment has increased since 2020 to a total employment of 11,403 in November 2024, according to the Texas A&M University Real Estate Center. The unemployment rate has increased slightly since November 2023 with a November 2024 rate of 4.56%.

Milam County remains mostly rural and agricultural in nature; however, it benefits from its location along Highway 79, which is a route major route between Round Rock and Bryan/College Station, TX.

Rockdale is a city in Milam County, Texas, United States. Its population was 5,323 at the 2020 census. It is approximately 41 miles west of College Station. The climate in this area is characterized by hot, humid summers and generally mild to cool winters.

As a passing point of the "Camino Real" and the establishment of three missions in the area, a wooden fort was established on the south bank of the San Xavier River, to protect those missions, circa 1751. The fort was called San Francisco Xavier de Gigedo Presidio. In 1873, the town developed as the International-Great Northern Railroad came through the area. Rockdale was named for a nearby rock that stood 12 feet high and had a circumference of 20 feet. Rockdale was incorporated in 1878.

Rockdale was the site of a large Alcoa aluminum smelting facility, which could produce 1.67 million pounds of aluminum per day. The Alcoa plant profoundly changed the city, as noted in a Saturday Evening Post article by Rockdale native George Sessions Perry. Within a few years of its arrival in 1952, Rockdale almost doubled in population, changing in character from a predominantly agricultural economy to one heavily driven by manufacturing jobs. Smelting operations were halted at the Alcoa plant in 2008. The Alcoa plant closed in February 2014 when production at the atomizer ceased

The subject neighborhood has convenient access to employment within the neighborhood and other nearby neighborhoods. Churches, retail centers, and recreation facilities are easily accessible from the neighborhood. There are several major traffic routes that allow convenient travel throughout the neighborhood. The subject neighborhood is considered to have good accessibility via the above-mentioned thoroughfares.

The neighborhood is approximately 30% built-up and is primarily comprised of residential and agricultural properties along secondary thoroughfares and commercial properties along primary thoroughfares. The subject property’s neighborhood is located in a place that is in the growth stage of development.

The primary thoroughfares which provide access to the subject property neighborhood are Highway 79, Highway 77 and Farm-to-Market 908.

According to Milam County deed records, the subject property is currently owned by the borrowing LLC with a deed transfer date of October 4, 2024 and reported purchase price of $308,000. It is currently free and clear.

The subject property is located at the northeast corner of N Wilcox Street and Hillyer Avenue in Rockdale, Texas. It is currently one parcel of vacant land with an AS-IS value of $280,000, and a completed value of $530,000. Per the developer, the subject property has been through the majority of the entitlement process for (14) residential lots.

The proposed (14) lots will have an average lot size of 0.153 acres or 6,600 SF and approximately +/- 53 frontage feet. There is a LOI for the purchase of two lots (lot 9 & 11) for $75,000 per lot. Per the appraiser, the cost per lot is considered above market and was not utilized for the purposes of the appraisal report.

Title to the subject property is held through a limited liability company (LLC), of which there are three members. Our guarantor holds 70% ownership in this LLC and will be the only member signing loan docs and personally guaranteeing our loan. Our guarantor’s wife will not be on our loan and is not a member of the LLC.

Our guarantor self-reports a net worth of $615,363 and has a mid-credit score of 748. His 2023 tax returns report adjusted gross income of $22,912 and 2022 tax returns report $85,218 in adjusted gross income. It is important to note that our guarantor also receives $4,403.95 per month in VA benefits. These benefits are not taxable and therefore not shown on tax returns. We do have a copy of the Disability VA benefit letter that will be included in the due diligence package.

The borrower’s plan is to sell off some lots and build houses on other lots. They do 3D concrete printing to build houses. Here is a snippet from their marketing flyer:

[The borrowing entity] is a pioneering construction company committed to transforming the industry with its innovative 3D concrete printing technology. Their mission is to integrate traditional construction methods with this cutting-edge technology to create high-quality, affordable homes. Focused on environmental sustainability, they advocate for accessible home-ownership and are dedicated to researching and developing new materials and techniques to ensure durability and safety. [The borrowing entity] aims to drive the widespread adoption of 3D printing in construction, promoting a sustainable and cost-effective future for the industry.

VALUATION SUMMARY

We hired an MAI appraiser who valued this property at $280,000 (AS-IS) and $530,000 (AS COMPLETE). We did not order a BPO on this property, however we did get an environmental report which will be provided in the due diligence package for review.

At a 12.0% yield to investors and a 82.1% LTV (AS-IS) and 43.4% (AS COMPLETED) 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.
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