Community Finances: Investor Information
See also: Startup Equity Splits
The best way to Invest in a DomeGaia Community is to participate in the Startup of one. Start-up investiture is rewarded with % equity in the land equal to the percentage of the startup expenses contributed by the Investor. Since the land pays for itself via the Activities of the Community, over time the value of the investment not only increases by any increase in local real estate values, but also by the extent to which the mortgage has been paid down by the Community.
So, for example if a $1,000,000 property is being purchased for a Community, with a 30% Down Payment & Startup Expenses fund, an investor who contributes 50% of that $300,000 receives a 50% share in the equity of the land (for their $150,000). The Communities are responsible for their own Mortgages, which they are required to make payments on, so as the Community pays its mortgage down, the value of the shareholder's equity increases relative to how much of the mortgage has been paid off (in addition to any increase or change in the value of the land). So if that Investor keeps their Investment until the Mortgage is fully paid off, they would then own 50% of the full value of the land (which may also have appreciated in value).
Investors cannot force the dissolution of the Community or sale of the land, but they can sell their equity stakes in the land at any time. They can do so either via a private party transaction (at mutually agreed upon terms) or - if no buyer is available - each Community is Contractually bound to Be the Buyer of its own Equity Stake at Current Market Value. So if the above Investor wishes to sell their shares when the land appreciate 50% in value and the mortgage is 10% paid down, their shares would be valued at 50% * ($1,500,000 current value - $630,000 outstanding mortgage) = $435,000. If the Investor exercises their option to sell their stake in the land to the Community at its current Equity Value, the Community is required to buy it at that price. For Both parties' protection, the Community is required to complete the purchase as soon as reasonably possible without endangering its own existence.
While Communities are welcome to self-manage as they see fit, for their protection, and because of the potential profitability of startup investments, we recommend that Communities give strong preference to Active Full members as start-up Investors. Please also note that when calculating the Fair Market Value of the land for investor buyout purposes, any capital improvements made by the Community (such as buildings and roads) without use of start-up funds are specifically excluded.
We also have options for Investors who wish to participate at fixed annual ROIs. Please Contact Us for further details.
So, for example if a $1,000,000 property is being purchased for a Community, with a 30% Down Payment & Startup Expenses fund, an investor who contributes 50% of that $300,000 receives a 50% share in the equity of the land (for their $150,000). The Communities are responsible for their own Mortgages, which they are required to make payments on, so as the Community pays its mortgage down, the value of the shareholder's equity increases relative to how much of the mortgage has been paid off (in addition to any increase or change in the value of the land). So if that Investor keeps their Investment until the Mortgage is fully paid off, they would then own 50% of the full value of the land (which may also have appreciated in value).
Investors cannot force the dissolution of the Community or sale of the land, but they can sell their equity stakes in the land at any time. They can do so either via a private party transaction (at mutually agreed upon terms) or - if no buyer is available - each Community is Contractually bound to Be the Buyer of its own Equity Stake at Current Market Value. So if the above Investor wishes to sell their shares when the land appreciate 50% in value and the mortgage is 10% paid down, their shares would be valued at 50% * ($1,500,000 current value - $630,000 outstanding mortgage) = $435,000. If the Investor exercises their option to sell their stake in the land to the Community at its current Equity Value, the Community is required to buy it at that price. For Both parties' protection, the Community is required to complete the purchase as soon as reasonably possible without endangering its own existence.
While Communities are welcome to self-manage as they see fit, for their protection, and because of the potential profitability of startup investments, we recommend that Communities give strong preference to Active Full members as start-up Investors. Please also note that when calculating the Fair Market Value of the land for investor buyout purposes, any capital improvements made by the Community (such as buildings and roads) without use of start-up funds are specifically excluded.
We also have options for Investors who wish to participate at fixed annual ROIs. Please Contact Us for further details.
