Collective is the first fractional equity platform to enable investors to earn compelling equity returns on the construction of new single-family homes. Investors easily invest in new homes and profit from their sale. By making it easy to finance new home construction, Collective gives the power to build more homes to the communities that need them.
Here's how it works. Collective's Project Sponsors:
- Propose new construction projects for fractionalized equity investment.
- Invest their own capital in the project on the same terms offered investors.
- Raise the capital necessary to fund the home builds.
- Manage the project for a fee.
- Sell the home or homes constructed on behalf of their investors.
- Distribute the net income pro-rata. Collective is now open to (i) accredited investors or (ii) non-U.S. resident and non-U.S citizen investors, and accepts both digital U.S. dollars (USDC) and U.S. dollar ($USD) investments.
Why we’re excited, and why you should be too!
It’s time to fix the decades-long, widening gap between the supply of homes and the demand for homes. Among the biggest issues holding back production: it's hard for homebuilders to secure the financing they need to build new homes and meet demand because very few lenders focus and specialize in new home construction.
Collective is lowering barriers to entry to this massive market by making it easier to finance new construction. Because we’re so excited to bring this new investment product to market, we, the Collective Founders, will serve as Project Sponsor for the initial projects being listed on Collective. We will accordingly invest our own capital in those projects — under the same investment terms offered to every investor.
Here are the highlights of the first projects:
Build, sell, repeat
We are building and selling single-family homes in the $250,000 to $400,000 price range from a portfolio of plans that have successfully been built and sold thousands of times already. And we’re building for affordability: in today’s interest rate climate, we’re modulating down square footage, in some cases, to create better alignment of pricing.
We’re building on lots in established communities (with mature neighborhood landscaping and established municipal services). This not only makes homes more attractive, but it also enables us to better understand surrounding sales histories and to derive expected sales prices. According to Zillow, as of mid-February 2023, there are 15,700+ scattered lots for sale in the counties we’ve targeted for new home construction.
Strategic relationships with an established construction supply-chain: proven, trusted contractors, including Commence Logistics and ODC Construction, businesses that contribute to the construction of approximately 10,000 new homes in Florida each year. (Collective co-Founder Isaac Lidsky is a Founder and Partner of ODC Construction and Commence Logistics, which brings great synergies and aligned incentives to the opportunity.) Direct relationships with this supply-chain deliver efficiencies in cost and construction timelines.
Contractors are paid as work is completed (not when a draw on a bank loan is processed, which today results in an astounding industry average 80 day delay on payments which slows down work progress), mitigating working capital burdens for contractors and vendors. Happy contractors substantially improve time-to-market, maximizing IRR for investors.
Collective investors can view the status of the projects in their portfolio anytime.
Strong expected returns
We aim for a 13% to 18% investor IRR with the sale of new homes in 12 to 18 months. Equity return data supplied by our strategic construction partners based on a sample of hundreds of comparable projects support this target return. Financing is all-equity; no debt, no subordination. Investors participate pro-rata when homes are sold.
What drives us?
Millions of people need homes that do not exist. Current solutions to this worsening housing supply crisis have proved ineffective. Collective will attract new equity capital to the supply-side of this market with its compelling fractionalized equity offering and its efficient production model. Together we’ll build more homes.
The US has an ever-increasing deficiency in the supply of homes—currently up to 5.5 million and counting. Worse, the share of entry-level homes built declined from 40% in the early 1980s to around 7% in 2019. Meanwhile, new household formation continues to rise at faster rates than homes are being constructed. Indeed, at current levels, the average rate of home completion would have to triple to close the gap in home completions and household formations (source).
Home ownership affords greater wealth creation benefits, hedges against inflation, and mitigates the volatility of other major asset classes. Homeowners have a staggering 44.5x the net worth of renters, opening up a host of direct and indirect economic opportunities—like higher education, to name just one.
Collective will catalyze increased home production by delivering a new class of equity investors an attractive, simple way to benefit from new home construction while building needed housing supply. We’ll all do well while doing good.
We, the Founders of Collective, are so committed to this vision that we’re going to serve as the Project Sponsor for Collective’s initial project listings, contributing lots we own plus our personal investment capital. It’s a testament to our belief in Collective’s promise.
We hope you will join us!
To get started:
- Visit Home Construction Collective to learn about available projects for investment.
- Sign up using your email address.
- Verify your eligibility as (i) an accredited investor or (ii) a non-U.S. resident and non-U.S citizen investor.
- Choose a project and decide how much you want to invest above the minimum requirement (in USDC or fiat $USD).
- Sign project-specific legal Agreements. Each project, consisting of one or more new homes to be constructed, is encapsulated in a Delaware LLC. Equity investors buy Class A Membership Units in that LLC.
- Once the project is fully funded, construction begins!
- Sign into your account to get a snapshot of a project’s progress anytime.
- Upon the sale of the Projects home(s), earn your pro rata returns.
Still have questions?
If you’re interested to learn more and you can’t find the information you’re seeking, please contact us at firstname.lastname@example.org