RE: Inticement
From: Eileen McCourt (emccourtcharter.net)
Date: Sun, 29 Jan 2006 14:59:06 -0800 (PST)
At Oak Creek Commons, we offered purchase credits for the very first
investors up to 75K.  So, if someone put in 10K at the very beginning,
they received 20K of credit toward the purchase of their home for the
first 50K into the project; then there were one and a half credits for
the next 25K, so 10K would result in 15K toward their home purchase.
The additional credit was only toward the purchase of a home at OCC.
Everyone except one of the eight who received these credits ultimately
did buy a home at OCC.

We also offered interest terms to everyone for any investment amount
above $2,500 after the first 75K was obtained.  Eventually the threshold
for a loan to the community was any amount above 5% of the expected home
price (the first 5% did not accrue any interest, though looking back, I
think maybe it should have and we should have held the buy-in to
$2,500). The loan interest rate was above market by about 4 points, and
was adjusted down for incoming investments as the rates went down.  

We beat the bushes for investors and people used a variety of assets: a
401Ks, an equity line of credit on a current house, refinancing a
current home, liquidating stocks (just before the dot.bomb meltdown,
luckily for them) and so on.  We also had some money from relatives that
was invested independently (not used toward the purchase of a home).

Eventually, the first 22 or so families of 36 total received about a
2.5% discount off the final selling price in the last 6-9 months. Those
coming in at the end paid full price.  The home prices went up several
times during the project, but only the last increase was not passed on
to current members.  We used the pending increases as a marketing tool
to encourage people to commit in the final phase before construction
started.

We raised about 1.1 million from the group this way, or slightly more
than 10% of the cost of the project.  After we partnered with a
developer, we obtained additional investments from the group on a purely
speculative basis (the money invested would not be available toward the
purchase of their home but had to stay in the project until all homes
were sold).  We developed a very creative affordability program with
some of the proceeds from this last round of investments within the
group.

Eileen McCourt
Oak Creek Commons
Paso Robles, CA
www.oakcreekcommons.org

 

-----Original Message-----
From: Tim Clark [mailto:TimClark [at] 2feetunder.com] 
Sent: Saturday, January 28, 2006 12:52 PM
To: cohousing-l [at] cohousing.org
Subject: [C-L]_ Inticement

We would like to hear what other communities did to entice people to buy

in early.

Like:

Selection of unit based on date of becoming an equity member.
Graduated discounts on buy price.

Help please!

Tim
Central Austin Cohousing
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  • Inticement Tim Clark, January 28 2006
    • RE: Inticement Eileen McCourt, January 29 2006

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