Stagecoach Lane Residential l

Blackburne & Sons is pleased to present this First Trust Deed secured by a 1,705SF single family residence with 3 bedrooms and 2 bathrooms, located on a 2.54-acre parcel, in Willow Creek, Humboldt County, California.

The borrower will be using our loan to upgrade the property with an LED lighting system and purchase a second company delivery van. Blackburne & Sons will pay for the LED lighting system through escrow. Per the borrower the electrical upgrade will save him $5,000-$6,000 per month in electricity charges. The property is currently free and clear of any liens.

Humboldt County was formed in 1853 from parts of Trinity County. The county comprises the Eureka-Arcata-Fortuna, California Micropolitan Statistical Area. The county seat is Eureka. According to the United States Census Bureau, Humboldt County encompasses 4,052 square miles, of which 3,568 square miles is land and 484 square miles is water.

Humboldt County has among the most diverse climates of United States counties, with very mild coastal summers and hot interior days. Similar to the greater region, summers are extremely dry and winters have substantial rainfall. Humboldt County is a densely forested mountainous and rural county with about 110 miles of coastline, situated along the Pacific coast in Northern California’s rugged Coast Mountain Ranges. Humboldt County alone produces 20% of the total volume and 30% of the total value of all forest products produced in California. As part of the Emerald Triangle, Humboldt County is also known for its cultivation of cannabis, estimated to be worth billions of dollars. Proposition 25 allows patients and caregivers who are given a doctor’s recommendation to legally grow up to 99 plants in Humboldt County.

Per Data USA, in 2020, Humboldt County had a population of 136k people with a median age of 38.9 and a median household income of $49,235. Between 2019 and 2020 the population of Humboldt County grew from 135,940 to 136,101, a 0.118% increase and its median household income grew from $48,041 to $49,235, a 2.49% increase. The economy of Humboldt County employs 61.1k people. The largest industries are Health Care & Social Assistance (8,891 people), and Educational Services (5,411 people). The highest paying industries are Utilities ($58,889), Public Administration ($50,499), and Transportation & Warehousing, and Utilities ($48,611). The largest universities in Humboldt County are Humboldt State University (2,052 degrees awarded in 2020), College of the Redwoods (933 degrees), and Dell’Arte International School of Physical Theatre (31 degrees).

The city of Willow Creek is a census-designated place (CDP) in Humboldt County, California. Per Data USA, in 2020, Willow Creek had a population of 1.24k people with a median age of 39.8 and a median household income of $67,452. Between 2019 and 2020 the population of Willow Creek declined from 1,513 to 1,241, a -18% decrease and its median household income grew from $65,433 to $67,452, a 3.09% increase. The economy of Willow Creek employs 398 people. The largest industries in Willow Creek are Construction (71 people), Manufacturing (65 people), and Public Administration (57 people). The highest paying industries are Construction ($56,542), Total ($47,097), and Agriculture, Forestry, Fishing & Hunting, and Mining ($44,667).

Willow Creek’s first non-indigenous settlers were Chinese laborers from the mining and lumber camps, which earned the town the original name of China Flat. The China Flat post office opened in 1878, and changed its name to Willow Creek in 1915. According to the United States Census Bureau, Willow Creek has a total area of 30.6 square miles, which include 30.3 square miles of land and 0.3 square miles of water.

Willow Creek sits along the Trinity River. The city is described as a “rugged mountain community” nestled in the heart of the Six Rivers National Forest. This area of California is located in the Trinity/Shasta/Cascade Region, near the Oregon border, and is easily reached via State Routes 299 and 96. Willow Creek calls itself the “Bigfoot capital of the world”, has a Bigfoot Museum and holds an annual “bigfoot Daze” festival in September in honor of the creature, followed by various festivities in a local park.

SUBJECT PROPERTY DETAILS

The subject property was built in 2009 and is a 1,705SF single family residence. The home has 3 bedrooms, 2 bathrooms, and a 2 car garage. It sits on a concrete slab foundation and has a composition shingle roof, concrete lap Hardi-Plank exterior sliding, vinyl clad thermopane windows, custom built maple hardwood panel kitchen cabinets with laminate counter tops, laminate and carpet flooring, concrete patio, entry porch, and a double car garage with complete drywall finish.

The subject property also includes a 4,960SF greenhouse structure. The structure includes a Link4 System with full automation comprising of heating, fans, dehumidification, irrigation and fertilization. The borrower uses the greenhouses to grow cannabis.

The subject site is on a 2.54-acre parcel located on the southeast corner of Brannan Mountain Road and Stagecoach Road within the northwest sector of the greater Willow Creek neighborhood.

The subject parcel includes an Agriculture General Zone with a 1.0-acre minimum parcel size, and the primary legally permitted use is single family residential where accessory units are allowed. The site includes adequate size and a mix of public utilities and private on-site utilities which would meet the physically possible elements of legal development at single family residential with an agricultural component. The subject property includes a Commercial Cannabis Cultivation Permit (CCCP) overlay whereby the subject property owner owns the adjacent parcel and operates a commercial cannabis cultivation and processing facility that is linked to both properties.

The borrower was approved for retail cannabis sales at the property and just launched his retail sales division via delivery to cut out other retailers in the area marketing up their products 3 times. The borrower got upgraded from a farm permit to a microbusiness permit in October 2021, allowing him to expand in many areas. He grows and sells cannabis onsite. He wholesales to large brands, and also sells his own branded products both to other dispensaries and through his newly permitted retail delivery service. He also packages other brands' products onsite, and they make a variety of different concentrates, etc.

The borrower does not live in the subject property. It is used as a guest house. The borrower actually lives next door to the subject property.

Title to the subject property is held personally. The borrower is a single man, reports a net worth of $3,579,297 and has a mid-credit score of 752. In 2021, his personal tax returns reported $178,974 in adjusted gross income. In 2020, his personal tax returns reported $105,412 in adjusted gross income. The borrower also has outside employment working as a director of operations for a large cannabis farm. His salary is $150,000 per year and this jobsite is located just 5 minutes away from the subject property.

The borrower’s cannabis business is filed under a corporation, This corporation is not a part of our loan. In 2021, the corporation tax return reported net income of $343,510. In 2020 the Corporation reported a loss of $1,077,743. A letter of explanation on this loss will be in the due diligence files for review. The borrower provided a year to date profit & loss statement on his business through October 2022, and it is reporting $295,000 in net income.

We hired a local General Certified appraiser who valued this property (AS-IS) appraised value of $575,000.00.

At an 10.0% yield to the investors and a 65.00% 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.

LOAN OFFERED HEREBY IS A CANNABIS LOAN THAT WILL BE SECURED BY A PROPERTY UTILIZED TO GROW, MANUFACTURE, PROCESS, DISTRIBUTE OR DISPENSE CANNABIS OR CANNABIS RELATED PRODUCTS. THIS LOAN INVOLVES SIGNIFICANT ADDITIONAL RISKS NOT ATTRIBUTABLE TO LOANS UNRELATED TO THE CANNABIS INDUSTRY AND SUCH LOANS ARE NOT SUITABLE FOR ALL INVESTORS. POTENTIAL PURCHASERS OF FRACTIONAL INTERESTS IN THIS LOAN MUST REVIEW AND UNDERSTAND THE INFORMATION SET FORTH IN THE OFFERING CIRCULAR ENTITLED "ADDITIONAL RISKS AND CONSIDERATIONS OF CANNABIS RELATED LOANS" PRIOR TO INVESTING. PURCHASERS OF INTERESTS IN THIS LOAN SHOULD ALSO CONSULT THEIR OWN LEGAL COUNSEL AND INVESTMENT ADVISORS WITH RESPECT TO THESE RISKS TO DETERMINE IF AN INVESTMENT IN THIS LOAN IS APPROPRIATE FOR THEIR PARTICULAR RISK TOLERANCE PROFILE AND FINANCIAL SITUATION.

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 Tommy 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
Publicly advertised to California residents only under California Department of Corporations business plan permit.
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