In today’s challenging environment it is important to take a closer look at the economics of real estate development.
Traditionally, initial buyers shoulder 100% of the costs for amenities, infrastructure and other improvements, which creates a high barrier to entry. By utilizing a Capital Recovery Fee Assessment, developers can now more fairly apportion expenses incurred for permanent improvements among successive owners of the property, who will be enjoying the amenities and improvements for years to come.
The assessment is 1% of the gross sales price, repaid by future buyers who willingly assume the obligation, much like modern HOA dues and other assessments. Developers can retain the income stream, or offer the income stream to pension funds, endowments, insurance companies and other investors looking for a long term income stream correlated to inflation, while providing project liquidity. This, in turn, can provide “cascading” benefits to the local economy. A healthy construction industry is essential to the U.S. economy, and Capital Recovery Fee Assessment can play an important role.
Freehold works almost exclusively with major developers and owners of significant property holdings. Through a team of approximately 800 agents nationwide Freehold Capital Partners has created Capital Recovery Fees to hundreds of billions of dollars worth of real estate projects across the United States, including properties ranging from subdivisions to medical centers to Class A office buildings to retail centers to hotels. If this sounds like you or your business, we welcome your inquiry.