Seeded with $2,000,000 and scaled with $1,000,000 per month for 12 months, building and recycling capital through a rolling pipeline of homes at $300k cost and $400k sale.
Illustrative only – for discussion, not a formal offering or forecast.
$6,908,000
Remaining profit after investors receive 100% capital return plus 20% IRR target
The initial $2,000,000 commitment is allocated 90% to construction capital and 10% to land banking and working capital, maximizing deployment velocity.
$12,600,000 deployed immediately to start building homes.
This allows ~6 homes to begin construction immediately at $300k per home.
$1,400,000 reserved for lot acquisition and operational buffer.
Ensures continuous lot pipeline and liquidity for near-term expenses.
The program raises $1,000,000 per month for 12 months, for a total equity program of $14,000,000. After Year 1, no additional equity is required; capital and profits recycle.
Early months ramp at 3 homes per month while trades stabilize. As capital recycles from initial sales, throughput increases to 6 homes per month in the back half of Year 1.
With 36 homes sold at $400,000 each and all-in cost of $300,000 per home, Year 1 proves out the unit economics.
36
Early phase of the capital recycling engine.
$14,400,000
36 × $400,000.
$10,800,000
36 × $300,000.
$3,600,000
Based on ~$100,000 per home.
After Year 1, no additional equity is raised. Capital and profits are recycled through more homes, scaling volume while maintaining roughly $100,000 profit per home.
| Year | Homes Sold | Profit / Home | Year Profit |
|---|---|---|---|
| Year 1 | 36 | $100,000 | $3,600,000 |
| Year 2 | 54 | $100,000 | $5,400,000 |
| Year 3 | 81 | $100,000 | $8,100,000 |
| Total (3 Years) | 171 | — | $17,100,000 |
$14,000,000
$2,000,000 seed + $1,000,000 per month for 12 months. No additional equity after Year 1.
$17,100,000
Profit across all recycled homes assuming $300k cost and $400k sale price.
$31,100,000
Equity ($14,000,000) plus approximately $17,100,000 of 3-year profit.
This is a simplified illustration. A full model would refine timing, absorption, leverage, and fees.
Seed capital ($2M) is always repaid monthly from M13-M36 (~$83k/month). Toggle controls the main capital ($12M): 5% monthly amortization starting M13 versus bullet repayment at M36.
With amortization ON, investor principal steps down by 5% of the original $12,000,000 each month from Month 13 until fully repaid. With amortization OFF, principal is modeled as outstanding until a bullet repayment at Month 36.
This waterfall shows capital raises, revenue from home sales (starting month 7 as homes complete and sell), construction costs, and principal repayments (if amortization is enabled). The recycling model generates continuous revenue after the 6-month construction period.
This waterfall shows capital raises, revenue from home sales, construction costs, and principal repayments (if amortization is enabled). Amounts stacked above the axis are inflows; below are outflows.
Track the relationship between funds outstanding and total collateral value (cash balance plus homes under construction at cost). This shows the security position throughout the program lifecycle.
Total collateral includes cumulative cash balance plus homes under construction valued at cost ($300k each). Once completed (6 months after construction start), homes are sold at $400k generating profit that increases the cash position.
The collateral coverage ratio shows how much security backs investor capital at any point. Cash accumulation from profitable home sales strengthens the security position over time.
Collateral values are estimates based on construction progress. Actual loan-to-value ratios would depend on appraisals and lender requirements.
| Month | In Progress | Completed | Sold | Total Assets |
|---|---|---|---|---|
| M1 | 3 | 0 | 0 | 900000 |
| M2 | 6 | 0 | 0 | 1800000 |
| M3 | 9 | 0 | 0 | 2700000 |
| M4 | 12 | 0 | 0 | 3600000 |
| M5 | 15 | 0 | 0 | 4500000 |
| M6 | 18 | 0 | 0 | 5400000 |
| M7 | 21 | 3 | 3 | 7500000 |
| M8 | 24 | 3 | 6 | 9600000 |
| M9 | 27 | 3 | 9 | 11700000 |
| M10 | 30 | 3 | 12 | 13800000 |
| M11 | 33 | 3 | 15 | 15900000 |
| M12 | 36 | 3 | 18 | 18000000 |
| M13 | 36 | 6 | 24 | 20400000 |
| M14 | 36 | 6 | 30 | 22800000 |
| M15 | 36 | 6 | 36 | 25200000 |
| M16 | 36 | 6 | 42 | 27600000 |
| M17 | 36 | 6 | 48 | 30000000 |
| M18 | 36 | 6 | 54 | 32400000 |
| M19 | 36 | 6 | 60 | 34800000 |
| M20 | 36 | 6 | 66 | 37200000 |
| M21 | 36 | 6 | 72 | 39600000 |
| M22 | 36 | 6 | 78 | 42000000 |
| M23 | 36 | 6 | 84 | 44400000 |
| M24 | 36 | 6 | 90 | 46800000 |
| M25 | 36 | 6 | 96 | 49200000 |
| M26 | 36 | 6 | 102 | 51600000 |
| M27 | 36 | 6 | 108 | 54000000 |
| M28 | 36 | 6 | 114 | 56400000 |
| M29 | 36 | 6 | 120 | 58800000 |
| M30 | 36 | 6 | 126 | 61200000 |
| M31 | 36 | 6 | 132 | 63600000 |
| M32 | 36 | 6 | 138 | 66000000 |
| M33 | 36 | 6 | 144 | 68400000 |
| M34 | 36 | 6 | 150 | 70800000 |
| M35 | 36 | 6 | 156 | 73200000 |
| M36 | 36 | 6 | 162 | 75600000 |
The waterfall prioritizes return of capital and the selected investor IRR target. Lowering the IRR hurdle from 20% to 15% reduces the share of profit going to investors and increases residual value for sponsors.
$31,100,000
Equity ($14,000,000) plus approximately $17,100,000 of 3-year profit.
$14,000,000
Investors receive 100% of contributed equity first.
$10,192,000
Additional distributions needed to deliver an approximate 20% 3-year IRR on investor equity.
$6,908,000
Remaining profit to sponsors after investors' capital and IRR target are satisfied.
Figures are approximate and for illustration. A full legal/financial model would specify detailed cash flow timing, compounding conventions, fees, and promote terms.