Builder Pre-Sale

The benefits of selling your finished project, without the risks of waiting. Flexible's Builder Pre-Sale lets real estate developers and value-add real estate investors lock in a sale before a project is completed.

The benefits of selling your finished project, without the risks of waiting.

Flexible empowers property owners to unlock better outcomes than they thought were possible. One way we do that is by letting owners choose their Offer Type. This article covers the Builder Pre-Sale Offer Type, designed for real estate developers who want the benefits of selling a finished project without the risks of waiting.

Not sure if a Builder Pre-Sale is right for you or your client? Use our Offer Type Finder to see other options.

What Is a Builder Pre-Sale?

Flexible's Builder Pre-Sale lets real estate developers and value-add real estate investors lock in a sale before a project is completed. Flexible buys your property today at a fair discount to the projected future value, so you can eliminate your market risk and unlock cash to fuel your business growth. Instead of giving you 100% of the proceeds upfront, we use an “earn-out” provision to release a portion of your proceeds at regular intervals as the project progresses.  

With a sale locked in early, you eliminate most of your market risk and capital risk—and get cash to keep you going and fund other projects. 

How It Works

Pre-selling gives builders the best of all worlds. It shifts the builder's speculative perspective of "if we built it, they will come" to "if Flexible comes, we'll build it—and we’ll lower our risk and capture most of the upside in the process." 

If construction financing is in place, a pre-sale to Flexible helps both parties benefit from lower borrowing costs that come from reducing the lender's future take-out risk. The lower the risk, the lower the rates, fees, and costs of the loan.

Flexible's Builder Pre-Sale is designed to make it easy for developers and value-add investors to secure profits, reduce risk, and generate cash. Here's how it works:

  1. Tell us about your project and share some details including your business plan, progress, and expected timelines. 

  2. We’ll review your proforma showing future costs and projected profit or cash flow at sale or stabilization and provide you with an outline of our findings. 

  3. We’ll make you an offer that factors in your basis in the property, progress, outstanding scope of work, and expected costs and timing to reach completion. 

  4. If you accept our offer, we’ll provide a non-refundable deposit and a portion of your total sale proceeds, based on how much work has been completed. You provide us with a Completion Guarantee that you will complete the project on-time and lien-free.  

  5. As you reach pre-determined benchmarks, additional cash proceeds will be released to you. Once a Certificate of Occupancy is available, all remaining cash proceeds will be released and we’ll both celebrate.   

Benefits

With Flexible's Builder Pre-Sale, real estate developers and value-add real estate investors can take advantage of a variety of valuable benefits, including:

  • Less market risk and capital risk. Builders have two major concerns: market risk (property values and the rental market) and capital risk. Even though your project isn't completed yet, we'll buy your property today, which virtually eliminates your risks.

  • Guaranteed returns. We buy your property at a fair discount to its future market value. You lock in a price and benefit from a risk-free, guaranteed return.

  • Downside protection. Once construction is completed, any losses from declining values are fully burdened by Flexible.

  • Free up cash. With cash in hand, you can pursue and fund new projects.

Terms to Discuss with Flexible

  • Flexible's Builder Pre-Sale Offer Type is designed to give you options. When you're ready, contact one of our Offer Guides to discuss:

  • Any questions you have about the Builder Pre-Sale process

  • Any questions you have about your property’s valuation and our cash offer price

  • Your preferred timeline

  • Any special requests you may have

FAQs

Does Flexible require any type of guarantee from builders?

Yes, we require a Completion Guarantee—a promise by the owner for on-time and lien-free completion. The Completion Guarantee expires when the property receives a certificate of occupancy.

When does ownership change hands?

Ownership can change hands at any point during the life of the project, based on the builder's preferences. As the project gets closer to completion, there are fewer "unknowns" and the reduced risk will often result in more favorable pricing. However, changing market conditions at the time an agreement is signed will be the biggest determinant of pricing. 

Does Flexible have any say in the management of the project?

As part of the purchase contract, the builder and Flexible will agree on rights, roles, and responsibilities, plus other governance matters to make sure both parties see the agreement as fair. Because Flexible takes ownership of the property, the relationship between Flexible and the builder is similar to other owner/contractor relationships in terms of project management and control.

What happens if I don't finish the project on time?

Both parties agree on earn-out provisions that stipulate how future proceeds will be adjusted based on the timing of completion. In most cases, there will be incentives to finish early.

This article is intended for informational purposes only and should not be construed as financial, legal, tax, insurance, or investment advice. Flexible encourages you to contact an Offer Guide to discuss your unique situation and consult qualified third-party financial, legal, tax, insurance, or investment professionals prior to making any related decisions. 

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