jonmagic
09-05-2008, 10:53 AM
We are 10 vibrant twenty something’s in the process of purchasing a piece of property off of Graton road in Sebastopol for use as a community garden/living space/educational center. We are forming as an LLC.
We have founds for a large down payment of $300,000 but are searching for private loans for the remaing $500,000.
We would like to offer three options for investors:
2.5% interest annually over 20 years with no interest the first two years (to allow for infrastructure to be built that will support the full weight of the loan)
or...5% return on investment paid out evenly over twenty years.
You are also welcome to make a simple donation.
We understand that the banking system right now is in crisis and there would be no way for us to support a traditional loan at the current 9% annual interest rates. We also understand the savings accounts are ranging between 1-2% for small sums and 3% for larger deposits. We feel this is a perfect time to ask our community members who have known or old money to invest it into the community via our LLC instead of locking it into a bank.
Let us know if this speaks to your heart, mind or finances
-Sequoia meadows LLC
contact:
[email protected]Zeno Swijtink
09-06-2008, 09:12 PM
This message is so badly worded and misspelled that it has the feel of a Nigerian scam.
Braggi
09-06-2008, 09:34 PM
This message is so badly worded and misspelled that it has the feel of a Nigerian scam.
It won't work anyway. 10 twentysomethings won't be able to get building permits to put up something that will legally house them.
This County is set up to encourage single family dwellings and discourage exactly what this group is planning. No communes in Sonoma County!
They only way they could do it is if all the buildings already existed.
We've looked into it. This County don't want no hippie communes.
-Jeff
Dynamique
09-07-2008, 10:21 PM
then how do you explain the existence if all these co-housing developments?
It won't work anyway. 10 twentysomethings won't be able to get building permits to put up something that will legally house them.
This County is set up to encourage single family dwellings and discourage exactly what this group is planning. No communes in Sonoma County!
They only way they could do it is if all the buildings already existed.
We've looked into it. This County don't want no hippie communes.
-Jeff
raines
09-08-2008, 04:56 AM
We are 10 vibrant twenty something’s in the process of purchasing a piece of property off of Graton road in Sebastopol for use as a community garden/living space/educational center.
Congratulations, it sounds like you've got exciting plans to create an Intentional Community (https://www.ic.org/) of some type, perhaps some sort of EcoVillage (https://www.EcoVillageNews.org/)?
A few basic questions come to mind when I encounter groups like yours:
Is there a defined vision for the group?
Do the members share certain values? History?
What experience do members have in running a business of this scope and nature?
What experience do members have in community living?
What is the market for the products and services you hope to sell?
Have you figured out a governance/decision-making process?
What kind of legal and financial advisement is the group getting?
What is the zoning and carrying capacity for the site? What changes will be needed to acheive your vision?
What are potential impacts on neighbors, and what do they think about the idea? Is there potential NIMBY ("Not In My Back Yard") opposition?
What's the exit plan in case things don't work out? Do members share in gains/losses when they leave?
Who are your allies and partners in this venture?
While you don't need to have every 'i' dotted and 't' crossed and all the answers to the above figured out in triplicate to get started, you may find that the confidence of potential partners and investors, and therefore your chances of success, will be enhanced the more you can show you are working towards answers to most of the above.
We've looked into it. This County don't want no hippie communes
Jeff, perhaps you can share more about the nature of the restrictions you found, how long ago you looked, what you were trying to do at the time.
As Dynamique notes, there's several cohousing (https://www.cohousing.org/) neighborhoods in the area: one long-established one in Sebastopol and two under construction, an existing one in Petaluma, and ones in downtown Cotati (just celebrating its fifth anniversary) and Eastern Santa Rosa. These were largely created by reputable, well-financed professional housing developers, in partnership with the future residents (with significant government subsidies and assistance in the case of the newest projects), going through approval processes that took some time, using purchase option agreeements that didn't fully vest until city/county approvals were secured, to minimize the upfront cost and risk to the group. It also may help that the projects were structured legally as condominiums, with individual homeowners getting conventional mortgages to pay off the land, construction, and development costs, so the cities and county felt the risk (political or otherwise) was minimal.
The one most likely relevant to your plans, Jon, is perhaps the project in Petaluma, Forty Oaks, where the members were able to cluster homes despite two-acre minimum lot sizes by drawing the subdivision lines (at the advice of a county planner) like a pie chart, with the homes placed near the middle and a band of open space around. That may not be at all the model you envision, but the key learning you may want to take away is: creative approaches and a deeper understanding may help achieve your ultimate goal.
We are forming as an LLC.
That's a fine way to help members invest together in the venture, but as you may have found, few lenders will be willing to advance funds against an entity (a Limited Liability Corporation) that protects the members from their claims without personal guarantees, credit records, employment histories, and sufficient asset bases.
Banks don't want to own property (foreclosure is a last resort), but they do want to minimize risks. Given the high failure rate of startup ventures, even with a significant downpayment built up as equity, there is no guarantee that the value of the property will justify the effort.
We have funds for a large down payment of $300,000 but are searching for private loans for the remaining $500,000.
How much are the members putting in individually and collectively? What's the source of funds? Will lenders be secured by title on the property? Will notes be callable or replaceable if the investors need the bucks? Is $800,000 the asking price, or a negotiated fair market value? What startup costs do you anticipate just to make the project habitable for one person, let alone twenty, let alone an up-and-running business? Do you have a formal option? These factors make a big difference in the level of risk involved, and the return that investors would expect.
there would be no way for us to support a traditional loan at the current 9% annual interest rates
That's not surprising; few young first-time homebuyers qualify for "conventional" fixed-rate financing at reasonable rates. That's part of why lenders offer(ed) variable-rate "balloon" financing: you get in based on the low initial rate, and by the time the rate jumps up in a few years, you've got more equity and a track record and are making more money (so the plan goes, at least until it got out of hand recently) so you can refinance into a more-conventional loan that you can afford.
So rather than seeking "permanent" 20-year financing now, you might look into setting up a Revolving Loan Fund or seeking other shorter-term, higher-rate financing that you work to reduce and replace as time goes on. You may be able to make a more-attractive offer that brings the investment partners you need more rapidly.
Let us know if this speaks to your heart, mind or finances
To be a successful long-term partnership between parties, it would need to speak to all three. You haven't said much about the vision of community; have you read books like Diana Leafe Christian (https://www.DianaLeafeChristian.org/)'s "Creating A Life Together?"
You may also want to look into regulations around securities laws and solicitation of investment. While there are "safe harbor" exceptions for "friends and family" outreach and investment pools of people co-managing an LLC, posting specific offer terms to solicit investment on a public web-archived bulletin board may not be in your best interest. IANAL (I Am Not A Lawyer), but I've worked with forming cohousing groups that have gotten advice along these lines.
Good luck in your new venture! If I can be of assistance, please don't hesitate to contact me or my wife Betsy Morris, who has extensive training in urban planning and experience in community development and market research; we offer free half-hour coaching sessions to people seeking and forming community (and it has been over a year since we last got to visit Screamin' Mimi's (https://www.screaminmimisicecream.com/)).
Raines Cohen, Cohousing Coach,
Planning for Sustainable Communities
at Berkeley Cohousing
P.S.
This message is so badly worded and misspelled
I don't know, Zeno, Privet (https://en.wikipedia.org/wiki/Privet) is a plant found in living green border structures at the edge of properties, and they say good fences make good neighbors, so the investment they seek could be seen as a Hedge fund (https://en.wikipedia.org/wiki/Hedge_fund) :wink:
Peace Seeker
09-08-2008, 09:39 AM
Thanks to Raines for providing support and competent advice to this group of young folks.
No need to bad-mouth this vision when its nose has barely cleared the starting gate.
Nevertheless the risks and pitfalls are grave, so people are justified to warn about them.
While a half-million dollar community subsidy is large, 10 borrowers of $500 K works out to $50 K each. That doesn't strike me as an excessive amount to channel into home ownership in Northern California.
In the 1980s I tried to organize a similar, but much cheaper rural cooperative land purchase in upstate New York. Don't fuck up like we did:
We failed to get comprehensive and definitive legal advice and failed to adequately build in legal protections for investors. The whole project unravelled, people lost money, and I -- the primary invester by far -- barely scraped back my own investment, netting zero interest, and losing 10% to legal fees. I had to hire a collections lawyer to put a lien on the property seller's title and hold up his sale to a third party.
The seller turned out to be literally a professional, career swindler -- masquerading as a farmer, healer and earth mystic. Instead of the clean organic ag venture he pretended to be running, we discovered he'd been dosing the soil with all the standard ag poisons, for years -- when the spraying crew showed up to apply the spring treatment. He even stole someone's cow he was boarding, and sold it to a farmer down the road. We found the cow, and read the bill of sale. Meanwhile his wife ran off to Florida with another career professional criminal. But he had us all fooled. We bought his entire act. He used to host our tiny, churchy, alternative economic and environmental conferences on his "organic famrstead."
No one else in the project had the stomach to join me in the legal strategy (they could have, and I invited them). Instead, they all simply ate it.
So don't fuck up like we did. And don't try to do this on visionary mutual trust. Get a lawyer specialist with expertise. Consult with Raines or someone with comparable expertise. Put EVERYTHING in unambiguous writing. Spell out what the guarantees are for every player. What recourse will each player have, if the deal goes sour or unravels? And that recourse needs to be a tangible, readily enforceable guarantee, that any single injured party can undertake, whether or not anyone else is on board with them.
It's good to be visionary during these nasty, predatory times. It's good to feel positive and unified around a visionary project.
Believe me, however: That blessed, heady utopian perfume can all waft away, and leave behind a persistent stench of mutual bitterness and corruption, if anybody gets burned. The way to avoid that harm and pain (or at least minimize the risk) is to create exhaustive written legal documentation that covers every reasonably foreseeable contingency. That way, no one can later claim they were promised something they didn't get.
All that said, I hope you can pull this off, somehow.
Dave Hoffman