Alberta Street Pub

George says: "Wow. What a sweet, hard money loan! This loan is ideal, no guarantees implied, for today because It’s been 16 years since the last financial crisis. The wise investor will accept a lower yield to be better prepared for the next market swoon."

Blackburne & Sons is pleased to present this First Mortgage secured by a 2,068SF pub / music venue on a 0.10-acre lot, located in Portland, Multnomah County, Oregon.

The purpose of this refinance is to provide cash out to purchase and renovate an investment property. However, the property he is purchasing will not be a part of our loan. The subject property is currently free and clear of any liens or mortgages, however there are $12,527.67 in property taxes owed on this property. Per the rental agreement, these property taxes are the tenant’s responsibility. These taxes will be paid in full prior to or at closing.

Multnomah County is one of the 36 counties in the U.S. state of Oregon. As of the 2020 census, the county's population was 815,428. Multnomah County is part of the Portland–Vancouver–Hillsboro, OR–WA metropolitan statistical area. The state's smallest and most populous county, its county seat, Portland, is the state's largest city.

According to the United States Census Bureau, the county has a total area of 466 square miles of which 34 square miles (7.4%) are covered by water. It is the smallest county in Oregon by area. It is located along the south side of the Columbia River. The county includes a number of extinct volcanoes in the Boring Lava Field. The Oregon side of the Columbia River Gorge forms the eastern portion of the county's northern border. Major highways include I-5, I-84 and US-26.

Portland is the most populous city in the U.S. state of Oregon, located in the Pacific Northwest region. The city is situated in the northwestern area of the state at the confluence of the Willamette and Columbia River. As of 2020, Portland's population was 652,503, making it the 26th-most populous city in the United States, the sixth-most populous on the West Coast, and the second-most populous in the Pacific Northwest, after Seattle. Approximately 2.5 million people live in the Portland metropolitan area, making it the 25th-most populous in the United States. About half of Oregon's population resides within the Portland metro area.

In 2022, the median property value in Portland, OR was $484,800, with a homeownership rate of 62.2%, and the median household income was $90,451 the economy of Portland-Vancouver-Hillsboro, OR-WA employs 1.29M people. The largest industries in Portland-Vancouver-Hillsboro, OR-WA are Health Care & Social Assistance (185,387 people), Manufacturing (156,848 people), and Retail Trade (144,704 people), and the highest paying industries are Management of Companies & Enterprises ($109,167), Utilities ($101,318), and Professional, Scientific, & Technical Services ($80,410). The largest universities in Portland-Vancouver-Hillsboro, OR-WA are Portland State University (7,148 degrees awarded in 2022), Portland Community College (4,737 degrees), and Mt Hood Community College (1,754 degrees).

NEIGHBORHOOD DESCRIPTION

In the last generation, the subject neighborhood experienced dramatically rising property values, renovations, and infill development. Additionally, there has been new mixed use and apartment development along the Killingsworth, Alberta, and Fremont corridors.

Significant newer development near the subject has included the 31 unit Alberta Alive Paul & Geneva Knauls building, completed in 2024 at 780 NE Alberta Street, the 21 unit Alberta Alive Ronnie Herndon building, completed in 2023 at 510 NE Alberta Street, the 29 unit Isaka Shamsud- Din, completed in 2023 at 5421 NE 14th Place, a 15 unit apartment completed in 2022 at 450 Jessup Street, the 18 unit Bezel, completed in 2021 at 1477 NE Alberta Street, a 19 unit apartment completed in 2020 at 435 NE Church Street, and the 39 unit Lyra, completed in 2020 at 5470 NE 16th Avenue. A 32 unit apartment is currently under construction at 2465 NE Alberta Street, with completion anticipated by summer of 2025.

The subject property was built 1909, with periodic updates throughout the years. The last major renovation was in 2012 with an extensive remodel. The property contains 2,068 SF and has a 0.10 acre parcel.

Located on a corner lot, the subject is a retail restaurant building that is 100% leased to a tenant. It is used as a pub, restaurant and music venue. The lease agreement started June 1, 2024 and goes through May 31, 2025. The base rent started at $5,000 and has now increased as of January 1, 2025 to $6,000 per month.

The property has wood frame construction with fiber cement and cedar siding and flat built-up composition roofing. Finishes include a mix of hardwood and tile flooring with bead board, painted sheetrock and brick walls, and open wood ceilings.

The main level is demised into two separate dining areas with a bar, stage area, full commercial kitchen, and two restrooms. There is an unfinished basement with office, storage, walk-in cooler and equipment. Rear and side yard with wood frame roof with a steel roof cover and concrete patio seating area that is heated with radiant gas heating. Per appraiser, finishes are of average quality and condition overall. It has gas furnace heat with heat pump system for interior heating and air conditioning.

NE Alberta Street is a two-lane road fully improved with curbs, sidewalks, and lighting. The subject also has frontage along NE 11th Avenue, a two lane neighborhood street with curbs and sidewalks. The borrower purchased the subject property in 2012 for $200,000 on a land contract. The land contract was paid in full by April 2024. The building and business has been occupied and operating for 30 years. The rent has been increasing steadily and was lower in the previous years due to Covid. The borrower gave the previous owners some grace with rents due to the way the restaurant industry was burdened from the pandemic.

Title to the subject property is held through a limited liability company (LLC), of which, our guarantor is the sole member. This LLC is a holding company and does not file separate tax returns, according to the borrower’s accountant.

Our guarantor is a single man and will be providing a personal guarantee on our loan. He self-reports a net worth of $1,847,704 and has a mid-credit score of 640. He works as a self-employed handyman and provided a 2024 P&L for his handyman business, which reported $21,386 in net income. Per his 2023 personal tax returns, he reported $41,456 in adjusted gross income and in 2022 reported adjusted gross income of $107,900. The handyman income is reported on a Schedule C of his personal returns.

This rental income from the subject property is reported on a Schedule E on his personal tax returns, along with another rental property that he owns. In 2023, the income from the subject property reports net income of $40,797. In 2022, per the Schedule E, the net income from the subject property was $27,689.

We hired a local MAI appraiser who valued this property at $1,120,000 (AS-IS). We also hired a local broker who performed a drive-by opinion of value (BPO) and valued this property at $985,000.

At a 10.0% yield to investors and a 29.02% 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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