Builder-Developer/General Contractors Benefit from Working on CPR Projects
What we ask of you and our offer to you, as builder-developer/General Contractor is:
That you will work with us to construct a home that can sell for under the maximum sales price allowable, before the Cities or County require the tacking on of an "In-lieu" fee for their Inclusionary Housing tax program; whether the law at the time of construction requires more or less than a certain number of homes be built on one property at one or another time prior to the tax being additionally charged to the home and hence the buyer.
That the maximum sales price we mutually sell it at will be equal to what a 2-person income can afford to buy at the median income for this Metropolitan Statistical Area.
That we will allow you to share in the future equity of the home, based on our system.
That you will use the same quality materials you would use in building here as elsewhere.
Formula of benefits for working on CPR Projects
If a new home you work with us to build sells through our marketing for $450,000 instead of $900,000, we will create an agreement with the new home buyer to maintain the house as an affordable investment for future home owners and not allow the home buyer to resell it for a windfall profit from the price we sold it first for.
Therefore, a Example Formula to express your investment in the value of the home looks like this:
(This first example is a home where the land was a condo conversion, and the
deal was joint ventured with the land owner).
Sample Cost to Build: |
$339,892 | Cost of land, supplies, permits, subcontractor labor, etc | |
Buyer's Purchase: |
$450,000 | Discounted price to allow home sale at affordable level | |
Difference A: |
$110,108 | Net Profit, after cost of sales of 10%, to be split @ 25% with land owner, then the balance shared equally between development partners. | |
Appraised Value 1 : |
$900,000 | Price that this home would sell for on the open market | |
| Difference B 2 : | $450,000 | Value of home not initially-charged to the home buyer, nor initially-paid to the builders. This value is shared by the builder-developers in equity, and may be disbursed over time to the parties, if not at once. We need create a formula, after talking with a bank, for disbursal. (We would want take into account the value of the property, over $900,000 - the appraisal amount - from year to year as additional security for disbursal). | |
| Buyer Shared Equity 3 | Buyer would share in an amount with the master developer over and above the original appraised price, dependant upon the increase in value from year-to-year. |
Assumed appraised amount. Value will depend upon actual appraisal.
We will have to take this idea to a bank and see if they will loan on this amount. If they do, then the buyer would not be responsible for paying it back, but would as the partner in the home be liable to lose the equity gained and investment in the home, if this amount was borrowed against and not paid back by the builder-developer/contractors. (So we will have to have an iron clad agreement of some kind to protect the home buyers).
Buyer's original share of equity and future value would be dependant upon how much of an initial investment they made. For example, if they put down 30% of the total asking price as a down payment, their intial and future interest in the equity would be 30%. They may own an interest equal to 50% of the current appraised value at any point in time. The other 50% is owned by the development partners, until the contracted partner is paid off. Pay off is 50% of the difference between the asking price and the appraised value.