Reader question: How to ensure developers are fair to creatives?
“In response to the blank canvas Savings #2 – As an up and coming home buyer in Atlanta as well as being a young architect, I love the idea of a blank canvas or “shell” although I feel as though developers would not lower the home price and instead make more profits by leaving out the “finishes” of the home and call it a feature. I think that this is a great idea but it needs to be done in such a way as to protect the young “creatives” who’s buying power is minimal.” Kellen
It starts and ends with the integrity of the developer, and at CoolTown Studios we only work with those who have it. That means it’s in the developer’s DNA to pass on their savings to the home buyers. The following is the basis of criteria we use when determining which developers we’ll work with when establishing a beta community to provide high-style, low cost communities for creatives:
1. Integrity (doing the right thing when no one is looking)
2. Motivation (passion)
3. Capacity (open-minded)
4. Understanding (do you know what really drives creatives?)
5. Knowledge (implementation know-how)
6. Experience (to answer the question, where have you done these?)
“Without integrity, motivation is dangerous; without motivation, capacity is impotent; without capacity, understanding is limited; without understanding, knowledge is meaningless; without knowledge, experience is blind. Experience is easy to provide and quickly put to good use by people with all the other qualities.”
Note that many of today’s investors have this reversed, then wonder why so many deals fall apart in the end, or why they never invested at all in what became highly profitable ventures.
These are the qualifying principles used be Dee Hock, the founder of Visa, in establishing a system we trust even more than cash, based on a “very old, very basic idea – the idea of community.“
Image: Can Company, Baltimore, by Struever Bros. Eccles & Rouse, among the firms that follow these six principles better than any I know of, especially when it comes to passing on savings to customers.
A question…I’d love to bring potential clients/homeowners in as early in the development process as possible, but in NY, the State treats condos as securities. That invokes anything and everything you’d imagine for a bond or stock issue…drafting a prospectus, and relating to my question here, a quiet period that prohibits any “pre-selling.” so there really appears to be no way to bring prospective owners in early in a meaningful enough way to promise security (i.e., work with me and i’ll lock up this unit for you). maybe with a wink and nod, but i’d bet the NYS Attorney General’s Office (the entity responsible for policing condo plans) would have something to say about that!
I’m not familiar with NY state securities law, but if they don’t allow you to pre-sell, the other possibility is to follow a trend in growing companies, which is equity sharing (via the LLC created specifically for the project). That way potential home buyers can take part as limited partners instead.
Thanks but I would guess they’d catch you there too. It’s onerous, and really doesn’t make much sense.
Thanks for the thought though.