3433 E. Sells Dr Project #1 Performance Summary Presentation
This is PhixNPhlip.com, I am Shane Cook, Joe Cook is also on the call he’s my father and partner. In starting up PhixNPhlip.com
that’s PHIX n PHLIP dot-com if you want to check us out online. This presentation will also be a blog eventually and we’ve got lots of different links to the projects that we’ve started. We don’t have one available right now, but we also keep as many updates as we can roll in through those different sources. So as Jaime gets this scrolling down when the subscribers distribution at 3 4 3 3 East Sells Dr.
This was our first project and we ended up with an annualized return of 16.7%.
We’ll walk you through how we got a little bit later in general our goal at PhixNPhlip.com is to provide a 12% to 18% annualized return and to have periodic liquidity with a number of projects for the investors to choose from throughout the year. The picture you have on there is is Sells Dr. that’s a nice modern design that we ended up with the house. We’re just going to quickly go through a summary of the offering, the project local location, design and construction summary. Some of the people who helped us put it together, a summary of our project updates. Then we’ll show you our marketing strategy, the distribution of the profit and yield through our P&L as well.
Arizona statutes recently opened up in 2015 to allow for real estate investment crowdfunding. Until recently that wasn’t really available to everybody. You now can invest in one of these crowdfunding projects for as little as $1,000.
We happen to do it in real estate but you don’t necessarily have to restrict your crowdfunding in the state of Arizona to real estate. If you’re an accredited investor that doesn’t limit you from investing as well, it just says that unaccredited Arizona residents can invest anywhere from 1 to $10,000. So we use today’s technology and the data-driven process to create as much experinces we can with our projects and efficiently underwrite them like we’re already doing. This allows our investors to diversify their capital and allows us to offer investors a share of the project. Like I said before we attempt to reach a 12 to 18 percent annualized return and have the periodic liquidity.
We started Sells Dr. back in 2019 and offered over 600,000 in individual secured participating preferred non-voting membership interests.
That’s a mouthful but we tried to be pretty specific about what we were offering. So then on May 22nd we closed that offering. The offer was that we would pay the anybody who participated in the crowdfunding a 6% preferred interest on their investment, plus a 40% net profit share after the sponsors participation, which was in this case $45,000. So the 6% preferred interest is the base part of the return and then the profit share on this particular project is 40% of the net profit share. Then after the sponsor participation added another 9.2 percent to the return and that was about a 300 day project. When we annualized that for 360 days it’s an annualized return on the investment of 16.7 6 percent!
We’ve referred to this project as Arcadia lite or Arcadia lite crowdfunding project number one a couple of times.
So we bought this property through Connie Gould , like I said from the Drums Paul and Paul Drum and Geord, that’s what it looked like there back in November of 2019 right after we bought it from him. The design that we came up with we started with a 1958 house that needed completely redone. We weren’t quite sure what we’re gonna do with it. At first and while assessing, we really didn’t you know what we wanted to do with it. We decided that a completely new project was really what we were gonna go with. Even in the demo phase we ended up tearing down more than we originally thought. We would and just ended up with mostly a new home.We left a fireplace and pieces of the foundation otherwise pretty much everything else was a replaced head-to-toe. We went with this clean modern design, when we were done all the bells and whistles and in the end we sold it in a few weeks for over $400 a square foot! You can check out all kinds of videos on our YouTube PhixNPhlip which is part of my real estate channel at SEV living. You can Google neither of those to find our YouTube playlists and we’ve got lots of demolition videos and update videos of other kinds of stuff on there you can check out.
Our design and construction summary we worked with Gwen Butler at GTNJ Architecture to take care of all of our design work.
She also took care of all of the work with the city including working with our legal team for a variance that was really the city’s fault that we had to apply for the variance in the first place. It’s a long story, but it added time and expense to the project that we’ll see down in the P&L. We ended up with about a 2,200 square foot 4 bedroom 2 Bathroom modern design home like you see there and you can find more 3D walkthrough videos of that of that house on the YouTube channel and PhixNPhip.com playlist as well.
Our construction partners were Kevin Keller and Nicole Wheeler.
Nicole is a fellow realtor at My Home Group and they just did an amazing job. Adding on top of Gwen’s spectacular design they had some custom cabinetry items in here that were amazing. Including hiding the pantry and a center island masterpiece that was more of an artistic piece, than necessarily you know a straight functional piece. It was also functional but it had a very very artistic design to it and you can check out those new build videos. Also check out our youtube channel on the PhixNPhlip.com playlist.
Here’s a big list of them like I said this will be a blog so if you just check out the blog in a day or two you can click on all of these links if that’s easier for you and like like I said our blogs at our investment page is the same place PhixNPhlip.com.
I suggest you look at in more detail if your interested, but it’s kind of a snapshot of the analysis of the comps we did and how they evolved over time.
Really in the beginning we thought 270 to 340 a square foot was maybe where we were gonna end up. A you know major remodel , not necessarily a teardown. But by the time we got done in December we were into the project pretty heavily, we were thinking you know 330 to 370. I might be able to push the price along there but the 330 to 370 a square foot wasn’t looking unreasonabl. We follow the Cromford statistics for an analysis of the MLS data and just looking at the comps and the statistics continued to allow us to push the price. So we pushed the price, I think if we’re up to 420 a square foot when we listed 948K. Then we listedan in three weeks we got under contract. To sell the property we had to put a new garage door and they wanted the garage door panel taller and foot wider so they could park their sprinter in it. So in exchange for a little bit more and purchase pricing in the negotiation process we ended up at $934,000.00. We had to you know add this garage during, we had a little bit of other construction to finish anyway so we took care of all of that and at 934K that was 406 per square foot. This isn’t necessarily the top record setter in the zip code but it’s definitely pushing the average and we definitely pushed our initial expectations there.
Next we roll in to our profit and loss statement you can see like I said we sold it for $934K.
In this commissions and cost basis closing is both transactions the purchase and the sale. So the closing costs and the commission’s and the cost basis and property come from the closing both transactions. So all of our closing costs transactions and the original purchase basis is $381 150 it’s in. it about 550 to 850 you can see our real estate taxes our fees and permits advertising and promotion. Some bank service charges, the insurance expense and the interest expense. I’m gonna make a note right here on this interest expense this includes the 6% base return the preferred return to the investors. We treat that as an expense inside the transaction because it’s it’s a preferred return. So we treat it as though it comes out before any profit comes out anywhere. Also down there in the professional and fees generally we wouldn’t have that big legal number. There where was the variance we talked about so we had to hire outside legal team. Figure out if we could do the variance the way we wanted it and what our possibility was. Whether it made sense or not and do some slight changes in the drawing. So all of that add a little bit of time for the interest, as well as some of the architect engineer and other professional fees as well as those legal fees the monthly escrow and other professionals are just all other costs. Getting the plans and/or the submissions done and at the bottom you can see the repair and maintenance and utilities. So we were off obviously over on the construction budget to our original estimate. Not substantially but part of a big part of that is some of the additional costs that came with the legal and the time from the interest from the variance that was an additional six or eight weeks in our transaction that wasn’t really necessary. It was due to the mistake by the city and they still forced us to go through the process. let me keep scrolling down and you can see where we have the profit participation in the sponsor fee that we’re gonna roll to the next page those are both parts of the total return.
On the next page we got the 934K sales price and then bottom net profit of $92,319.
That’s what included some of these distributions that were shown above the 45K to the sponsor with the remaining forty seven 398 thirty-seven when you split that 60/40 and add it to the base yield. That was the base yield percentage of that 50,000 55,000 interest number above and then the 18 959 is the interests percentage from the 40% above that gets us to the 9.2 percent return. For that portion in the 6% return for the previous portion that when we combine them and calculate them out to 360 day year there are 16.76% annualized return. I think it was a 308 day actual return. So the total paid to the sponsors was just about 73,500 just under that and the total paid to the interests in combined base yield and profit incentive was just under 30K.
Like I said we often get the question you know what does a thousand dollar investment get me or what does you know $10,000 investment get me?
So these are some of the actual investments in the project so our so the thousand dollar investment got you fifty one dollars on the six percent base yield and ninety two dollars on the net profit yield for a total return of a hundred and forty-one and thirty seven dollars. In addition to your additional thousand dollars so you know almost almost $150. If you put in ten thousand dollars almost you know fifteen hundred dollars or if or if you happen to put in eighty thousand dollars then you know almost eleven thousand five hundred dollar it returns them doesn’t matter really which of those worried still turns out to be a sixteen point seven six annualized return on those on those funds.