Earll Drive PHX Crowdfunding Investment Structure

by Jamie 05/08/2019

Earll Drive PHX: PhixNPhlip is offering up to $400,000 in; Secured Participating Preferred Non-Voting Memberships.

Offer:

6% Preferred Interest

(Prior to Sponsor participation)

Plus 40% NET Profit share

(After Sponsor participation of 35K)

Total Interests available: 400 @ $1,000 each = 400,000

The offering may close any time between the minimum being raised and  July 26, 2019. This offering is limited to Arizona Residents.

Estimated distribution closing 12/2019

 Click here to download the

E-Book for the Earll Drive PHX  project

Each Interest shall receive a preferred return based on a 6% annual rate (“Preferred Return”), accrued from the closing of the offering to the sale & distribution of the proceeds, if any, upon the re-sale of the House and the winding down of The Project. In addition to the 6% preferred return, the Interests will collectively receive forty percent (40%) (“Equity Participation”) of the net profit above the first $35,000 (“Sponsor Participation”) of profit, if any, prorated to their percentage participation. The Equity Participation is subordinate to the Sponsor Participation, which is subordinate to the Preferred Return, which is subordinate to paying all of the expenses of The Project. The offering memorandum provided after signing up to be a subscriber will detail all expenses.

 

We Own the asset, in fact our confidence is so great on the Earll Drive PHX project, that we will fund the project with or without the crowdfunding capital.  In addition, the structure detailed below is such the preferred return to you (subscriber), is paid before we (Sponsor) get our participation!

The resulting home will be approximately 2,089 square feet, with 3 bedrooms, 2 bathrooms, and a 2 car garage. 

The Great Room will open to a spacious kitchen with Dining Room and island. The Kitchen is strategically located with direct access to the laundry and mechanical room, and garage. The master bedroom will be tucked away in the back of the home and have its own exit to the back yard. It will have a large walk-in closet and easy access to the laundry room. The 2 additional bedrooms and guests will share the other bathroom.

EarllSite Plan

Below are all the details on the  Crowdfunding Investment Structure

Each Interest shall receive a preferred return based on a 6% annual rate (“Preferred Return”), accrued from the closing of the offering to the sale & distribution of the proceeds, if any, upon the re-sale of the House and the winding down of The Project. In addition to the 6% preferred return, the Interests will collectively receive forty percent (40%) (“Equity Participation”) of the net profit above the $35,000 (“Sponsor Participation”) of profit, if any, prorated to their percentage participation. The Equity Participation is subordinate to the Sponsor Participation, which is subordinate to the Preferred Return, which is subordinate to paying all of the expenses of The Project. The offering memorandum provided after signing up to be a subscriber will detail all expenses.

As an example, the return on $1000 was calculated using 3 different resale value scenarios, see below.

First, is a graphic summary of the costs associated with the purchase and construction of the project showing the total of $427,266.00.

General Costs Budget Earll Drive PHX Project
Acquisition         269,638
Professionals            10,000
Construction Budget  90,000
Total Carrying Costs            22,178
Sales & Marketing            30,600
Title Costs & Concessions              4,850
TOTAL COST OF PROJECT:         $427,266

As you can see, if we sell the Project for less than approximately $430,000, then in all likelihood the Preferred Memberships will not get a return and they will lose money.

Assuming a Break Even
Gross Costs before Sale         369,638
Sale Price        430,000
Sales Costs (3rd Parties)            49,478
Gross Profit              10,884
Preferred Return (Interests)              10,884
Base Profit (Company)                    –
Equity Participation (Interests)                    –
Equity Participation (Company)                    –
NET BALANCE (split)              10,884

The  Crowdfunding Investment Structure is based on expectations of what we believe is a reasonable range of comps (seen below) for the sale of Earl Drive PHX.

Low Avg High
$200 $225 $250
$417,800 $470,025 $522,250

One of our earlier Comparative Market Analyses (CMA) showed a sold price per square foot (psf) range of $200-$250 psf, this was from March of 2019.  The examples we will use in the summary are not guaranteed and any investment in real estate does come with risk of invested principle.

The Crowdfunding Investment Structure we have provided three final liquid sale price scenarios seen below.

As an example, the return on $1000 was calculated using 3 different resale value scenarios.

Scenario 1- Sale price of $455,000 would generate $26 in preferred return at a 6% preferred annual interest rate and profit participation return of $0. Resulting in a 2.63% return annualized to 6.67%.

Scenario 2- Sale price of $490,000 would generate $26 in preferred return at a 6% preferred annual interest rate and a profit participation return of $9. Resulting in a 3.58% return annualized to 9.07%.

Scenario 3– The third scenario is at a sales price of $525,000, so a $1000 investment will generate $26 in preferred return at 6% preferred annual interest rate and a profit participation return of $42. Resulting in a 6.81% return annualized to 17.24%.

Keep an eye out as the project updates we will have  (downloadable Spreadsheet ) where you can test your own scenario Crowdfunding Investment Structure.

 

This blog should be used for informational purposes only. This blog should not be construed as legal , real estate or financial advice. If you need legal advice regarding Crowdfunding Laws, or any other litigation matters, contact an attorney in your area.   

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