Re: compensating early risk takers
From: Lynn Nadeau (welcomeolympus.net)
Date: Thu, 15 Jul 2004 16:44:28 -0700 (PDT)
>Those early investors are taking their money from their current investments,
>and putting it on the line in this real estate investment, as if they were
>developers. How should they be compensated?
At RoseWind, now years ago, we figured that as a self-developed project 
the first 6 or so families had put in thousands of hours of work, as well 
as taking the risk of investing in a not-sure thing, and when we priced 
our lots (we are the build-to-suit type of coho, with the buy in money 
going to land, infrastructure and common house) we incorporated a 
"pioneer discount" of a thousand dollars for each year a household had 
put in development-phase work. A few thousand dollars was a token amount, 
in terms of actual work done, but felt like an acknowledgement of the 
special level of participation of the early families. 

Of course, the overall total income from lot sales needed to add up to 
our development budget, so in effect later families were subsidizing that 
lot-price discount to the pioneers. We noted at the time that this lower 
lot price would affect the "basis" for the lot owner, in terms of later 
resale capital-gains consequences, but chose not to worry about it. 



Lynn Nadeau, RoseWind Cohousing
Port Townsend Washington (Victorian seaport, music, art, nature)
http://www.rosewind.org
http://www.ptguide.com
http://www.ptforpeace.info (very active peace movement here- see our 
photo)

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