To expand CLEWIS in 2025 and reserve funds for land marketing/purchasing, acquire outside finance. This can be the Nov conference or prior to Nov, this can be direct solicitation of funds from Keneil on the Brookton transaction. At $2 M this will generate 4% return or $80K. At $10M this will generate $400K. The $2M is secured via already owned property. The $10M is secured by note portfolio.
Instead of the focus of the prior model on Fix Flip, SFH rental, the new funds can be used for land owner finance transactions. The reserve funds for internal buy and hold land transactions. On smaller transactions, the interest remains 14% but the loan shifts from 35 month interest only to 7 year amortization. In addition to the interest, land financed includes the 20% profit from property sale spread out over 7 years. Sheltered in IRA, this will not be subject to regular or cap tax.
An alternative idea is to use the above model but focus on the acquisition of SFH (mobile, duplex) with the intent of resale with or without owner finance. This model is outside the sandbox area. The purchase is via IRA funds. Potential return is 20% on sale and 14% on interest for 34% first year ROI. The underwriting model would need to be more restrictive on in-house finance since this is outside of playground with new playground players.
There are two engines needed. Engine one is the land analysis engine. Sorts the MLS data and identifies the good deals for either buy hold or buy resale. Engine two is the SFH analysis engine. There is no buy and hold for internal use. There is only resale. However, the end customer may be either buy/hold landlord or fix flip investor.
If the focus is the alternative idea of SFH, then an element to add is designation of commercial lender with commercial lender programs. This is DRSC elements to move existing borrowers to conventional program at time of purchase or after rehab. This will return capital for future SFH purchases. Also, this may attract more investors who will qualify for conventional commercial finance at time of purchase.
In either case, the goal is to move from interest only profit to a model of resale profit and sometimes resale profit with interest.
This is for flywheel. Current model does not compound growth inside shelter fast enough. By tripling return, a flywheel is created that reduces the need for outside investments as in paragraph one.