&O helps developers put their shovels in the ground, while enabling individuals to participate in the economic upside of a finished real estate project. In order to understand how this process works, it is important to break down the development process and the requirements developers must meet in order to qualify for a construction loan.

• Prior to obtaining the funds necessary to build a real estate project, developers often use their own money to pay for development costs including; land acquisition, architectural, engineering and legal costs and infrastructure expenses, such as building roads, adding electrical and sewage lines and obtaining city or state permits. Once a developer closes on a construction loan, the developer can usually recoup much of the money spent to that point.

• Aware of what their money will likely be used for, lenders have many conditions that developers must meet before they will loan any funds. For example, half of the total cost of a real estate project is often the cost of construction. Therefore, one condition construction lenders require is that developers pre-sell at least 50% of their projects before allowing a developer access to the funds promised in a construction loan. Lenders impose these requirements to limit their liability in the project. This is why developers engage in vigorous efforts to pre-sell 50%, if not all, of their projects.

• Because of these presale requirements, developers are prepared to discount the prices of the first units they sell in order to close a construction loan quickly. In exchange for those discounts, developers can accelerate the construction process, reduce equity requirements, lower carrying costs and limit exposure to market fluctuations.

By using &O, developers can engage in one syndicated, time saving sale to many individual buyers and gain access to a construction loan. When developers are able to advertise that a large portion of their project has been sold in a short period of time, marketing buzz and sales momentum are generated.

Typically developers negotiate with individual buyers selling one condominium unit at a time. This allows the developer to dictate the terms of purchase, because the buyer has very limited leverage against the developer. &O limits these developer advantages by introducing several buyers to a project at one time. Developers agree to the terms set forth by &O because of the sales momentum created, the financial value established by shovels going into the ground on time the ultimate returns associated with a finished real estate development.