Imagine partial/shared and fractional ownership of the first Enclave home. Imagine earning a share of the gross margin and share in the gain in appraised value of the home when it is sold at the end of one year.
Add to that a share of the profits from the home being rented as an Airbnb or VRBO property.
Also receive a warrant for Enclave shares at a favourable price to be exercised on the date of sale of the home.
The basic assumptions for an excellent investor return is based on an investment of $300,000 for the home and $150,000 for the lot. In addition, a gross margin of $100,000 is generated while the home increases in value at a rate of 1% per month resulting in a selling price of $613.618 after one year and a net distribution after GM and appreciation of $163,618.
A conservative view of rental income is based on a revenue of $200/night with a cost of $75 per night or a not profit of $125 per night. At a 20% utilization rate over one year that net profit for distribution is forecast to be modest at $9,140. The total distribution for the project would be approximately $172,000. A ratio of distribution at 75% to investors and 25% to Enclave would result in a return to investors of $130,000 which equates to 29% after one year based upon an investment cost base of $450,000.
In addition, investors could receive an added incentive of 450,000 warrants with an exercise price of $0.20 per warrant for shares at a ratio of 1:1. The net result would be $90,000 of investment capital added of investment in Enclave (assuming that 100% of the warrants are exercised). The investment risk is based associated with the cost certainty to build the home impacting total dollars invested which impacts the gross margin, the lot price, the appreciation in selling price over one year, the rental price and utilization rate as a short term rental.
Enclave will explore traditional and digital processes. The conventional approach is to establish an entity for the project. Issue shares in response to fractional ownership. Payout a dividend stream based on a share of the earnings and offer a warrant sweetener as a risk mitigator and reward. The digital equivalent may start with a DAO (Decentralized Autonomous Organization) that issues NFT’s and tokens to reflect a share of the earnings and a risk bonus. The entire process would be managed on blockchain. The advantage of NFT’s could be the democratization of investment from people anywhere in the world in any amount at any time.
An entity will be formed. The entire investment and liquidation will be handled online possibly using blockchain. Common shares will be issued proportionate to the investment and the corresponding percentage ownership. Common shares will be issued. A minimum investment will be established. Fifty percent of the appreciation after two years will form part of the return to purchasers based on fractional ownership. The remaining 50% of the appreciation will reside with Enclave.
The project will have a budget that will include the cost of approvals, the serviced lot, the home build, site development, commissioning, and a contingency. In addition, the budget will address any selling costs such as legal, listing, real estate fees if required.
Enclave will ensure that the build is compliant with VRBO and Airbnb rental protocol from a property management and visitor experience perspective. The net income from short term rental will be shared equally between investors and Enclave. The Enclave home is assumed to rent for $200 per night with a net profit of $125 per night after all fees and costs. The location and access to seasonal amenities will impact the amount of rental and utilization/occupancy.
A full assessment of costs including management fees, insurance, cleaning fees, furnishings, provisions must be included. Due diligence is required to compare Airbnb vs Vrbo.
Those who want to experience an Enclave Living experience can spend a night or a weekend in this home. They can experience the multifunctional living space, smart home at your fingertips, the operation of the kitchen, experience living in a netZero home. Enjoy the outdoor living spaces, natural light, and experience essential living where less is more.