With our Direct Yield Solution, Capital 1 will acquire up to forty (40%) percent of a preconstruction or conversion project. Under this Solution, the real estate club and/or contracted developer benefits from having the exclusive right to arrange for the reselling of the property to a third party, thereby precluding the possibility of "competition" or "under-cutting" of the real estate club’s and/or their contracted developer's marketing or sales program. Additionally under the Direct Yield Solution, Capital 1 must close on the property upon the satisfactory fulfillment, by the real estate club and their contracted developer, of all their relevant obligations pursuant to the relevant contracts, however, in the event the real estate club or their contracted developer fails to cause the reselling of the property to a third party, then Capital 1 is prepared to close with certain additional concessions to be agreed upon on a case by case basis.
The typical terms of our Direct Yield Solution are as follows:
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Wholesale discounting of property pricing, which equates to a set discount against the first preconstruction offering price.
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A dollar for dollar reduction guarantee in the purchase price is required in order to maintain the price differential between our property and their contracted developer’s property.
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Our sales price and price spreads are defined with the real estate club and/or developer being entitled to the price appreciation above and beyond the price spread.
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Deposits to be held by a bonded and insured escrow company.
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No part of the deposit may be used for construction.
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We will be permitted to transfer the property by assignment without charge.
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No other purchasers may assign until we are out of the project.
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The real estate club and/or their contracted developer must begin to resell our property on a ratio schedule.
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We will be permitted to be among the last to close.
Due to the reduced closing risk, the discount is typically lower than the Investor Participation Solution.
