Co-Build Equity Program

Project Overview

A partnership between the landowner and Proactive Builders LLC to develop a high-quality single-family home. This project is designed for resale, combining the landowner’s property with Proactive Builders’ expertise to maximize profits efficiently.

Landowner Contribution

• Land Value: Estimated at $200,000.
• The land serves as the landowner’s equity contribution to the project.

Proactive Builders’ Contribution

• Construction Expertise: Managing the design, permitting, and construction process.
• Licenses and Insurance: Ensuring the project meets all building codes and regulations.
• Development Costs: Overseeing subcontractors and materials procurement.
• General Contractor Fee: Calculated at 15% of the construction cost, valued at $90,000.

Project Scope

• Home Design: A 3-bedroom, 2-bathroom single-family home with quality finishes.
• Square Footage: Approximately 1,800 square feet.
• Estimated Construction Cost: $600,000.
• Total Project Value: $890,000 (land value + construction cost + GC fee).

Financing

• Loan Coverage: Financing is secured based on 80% of the house’s projected value.
  • For a house projected to sell at $1,200,000, financing provides $960,000.
  • In some cases, houses of this caliber in the area sell for as much as $1,400,000, creating additional profit potential.
• Construction Costs: The loan covers 100% of construction costs ($600,000), with the remaining funds applied as needed for other project costs.
• Unused Funds: Any portion of the financing that is not used during construction will be included in the final profits and distributed according to the profit-sharing agreement.

Profit Sharing

• Estimated Sale Price: $1,200,000
• Total Costs Paid:
  • $600,000 (construction cost, covered by financing).
  • $200,000 (land value, repaid to landowner).
  • $90,000 (GC fee, paid to Proactive Builders).
• Remaining Cash After Costs:
  • $1,200,000 – $890,000 = $310,000 (profits).

Breakdown of Profit Sharing

1. Contributions Paid Out First:
   • Landowner: $200,000 (land value).
   • Proactive Builders: $90,000 (GC fee).
2. Remaining Profits Split:
   • Additional Net Profit: $310,000.
   • Proposed Split:
     The profit split is determined by the percentage of equity contributed by each party:
     • Landowner’s Equity Contribution: $200,000 (69%).
     • Proactive Builders’ Equity Contribution: $90,000 (31%).
     • Resulting Split:
       • Landowner: 69% ($213,900).
       • Proactive Builders: 31% ($96,100).

Benefits to the Landowner

1. Guaranteed Asking Price for Land: If the landowner is selling their property, they will receive their asking price as part of the project, provided the price is within a reasonable market range.
2. No Upfront Construction Costs: Financing covers all construction costs based on 80% of the house’s projected value.
3. Customizable Agreements: Flexible terms tailored to your property and project goals.
4. Expertise You Can Trust: Licensed and insured contractors ensure the project is completed to the highest standards.
5. Maximize Your Land’s Value: Turn undeveloped property into a profitable investment.
6. Potential for Higher Returns: With a sale price of $1,200,000, the project generates significant profit potential.
7. Streamlined Process: Proactive Builders handles all aspects of the build, from permitting to completion.

Disclaimer

This proposal is an example and subject to change based on the specifics of the land, project scope, and agreed-upon terms. Contact us to discuss your unique situation and explore partnership opportunities!