Promissory note with 4.25% interest per annum, paid annually for approximately 10 years. Maturity Date June 30, 2030. NWH can pre-pay at any time.
Promissory note with 4.25% interest per annum, paid annually for approximately 10 years. Maturity Date June 30, 2030. NWH can pre-pay at any time.
|1||You can make impact now. We've started construction on our first 19 homes, with 300+ in permitting.|
|2||You can invest in scaling a solution: our model can grow the missing part of the housing industry.|
|3||You can increase housing equity: many of our projects are creating housing owned by Black churches.|
|4||Our funders include Dignity Health, Facebook, Community Foundations in Santa Cruz & Silicon Valley.|
|5||You'll earn a steady return: we have a 4-year track record of making all interest payments.|
|6||Thousands of non-profits own land & want to develop affordable housing; we unlock that potential.|
|7||There isn't close to enough government funding to meet the growing affordable housing need.|
|8||Our team has decades of experience permitting, designing, operating housing & social services.|
In many regions, housing is too expensive, leading to rapidly increasing displacement, homelessness, length of commutes, overcrowding, and poverty. These changes affect everyone but are disproportionately displacing and burdening lower-income communities of color—the same communities that have long faced housing discrimination.
New Way Homes creates new below-market-rate, affordable, and supportive housing by pairing private impact investment with non-profit landowners and new development strategies. A majority of our current and future projects are partnerships with black churches, with those organizations gaining the long-term full ownership of the housing.
Sibley, President of New Way Homes, co-founded an initiative that has helped over 950 chronic and veteran homeless individuals into permanent housing in Santa Cruz County alone. But, homelessness continues to rise. California now has the highest poverty rate in the US (including housing costs) at 23.8% and rising. Yet, the state is building only about half the housing each year needed just for new demand.
We re-designed the housing development structure from the ground up to create less expensive housing. Here’s how our model works:
We've seen our community being torn apart. Just in Santa Cruz, we have half the families with young children than we had 20 years ago. We have less economic and racial diversity. We have more people becoming homeless — even those who have and keep employment. We have teachers commuting for hours because they can’t afford to live in their school districts.
Every one of these problems trace back in part to the same thing — our housing crisis. It is causing or making each of these challenges much worse. Working on any of these problems directly without also solving the housing crisis is not enough. Our country needs a housing industry that can meet demand while also being equitable and putting people first.
So in 2015, Sibley founded New Way Homes to be a big part of the solution to the underlying problem of housing affordability.
We need far more housing and to have that housing really help people live affordably…. So, we’re building it! Our first 19 units (all either supportive housing or low-income affordable housing) are fully approved and being constructed. Our next 6 projects are under design and permitting - these projects include over 300 units ranging from very low-income housing to moderate-income housing for people like teachers, nurses, and so many other essential jobs in our community.
Having succeeded in getting our first projects fully approved and funded, we are now raising capital to accelerate our work. We're ready to create these next 6 projects AND start engaging with dozens of other non-profit landowners who have already come to us. Here are some of the projects we're working on.
We are actively exploring potential projects with churches, schools, cultural organizations, and many other parties. With your help, we're ready to accelerate this work. We hope you will be a part of our effort to create a new part of the housing industry. By lending New Way Homes funds for 10 years, you'll get a steady, annual interest payment and help solve one of the biggest underlying problems our society faces.
New Way Homes has financial statements ending December 31 2019. Our cash in hand is $363,609.98, as of May 2020. Over the three months prior, revenues averaged $19,225/month, cost of goods sold has averaged $0/month, and operational expenses have averaged $25,150/month.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
You should read the following discussion and analysis of our financial condition and results of operations together with our financial statements and the related notes and other financial information included elsewhere in this offering. Some of the information contained in this discussion and analysis, including information regarding the strategy and plans for our business, includes forward-looking statements that involve risks and uncertainties. You should review the "Risk Factors" section for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.
New Way Homes funds and creates below-market-rate rental housing: affordable, workforce, supportive, and other discounted housing. We are proving a scalable new model for filling the HUGE housing production gap. We do not compete for the scarce, government dollars for housing construction that is already fully used.
In 5 years, we want to have created an entire new part of the housing industry that has a fair balance between investor returns and maximizing affordability. We hope to be creating thousands of units of mission-driven housing per year in the least affordable areas of California and others will be duplicating what we're doing here and across the country. We already have non-profit land owners coming to us at the rate to achieve this and our first >300 units under design.
New Way Homes, Inc. was incorporated in the State of California in April 2015.
Since then, we have:
Historical Results of Operations
Related Party Transaction
Refer to Question 26 of this Form C for disclosure of all related party transactions.
Liquidity & Capital Resources
To-date, the company has been financed with $2,828,116 in debt and $882,884 in additional financing.
After the conclusion of this Offering, should we hit our minimum funding target, our projected runway is 8 months before we need to raise further capital.
We plan to use the proceeds as set forth in this Form C under "Use of Funds". We don’t have any other sources of capital in the immediate future.
We will likely require additional financing in excess of the proceeds from the Offering in order to perform operations over the lifetime of the Company. Except as otherwise described in this Form C, we do not have additional sources of capital other than the proceeds from the offering. Because of the complexities and uncertainties in establishing a new business strategy, it is not possible to adequately project whether the proceeds of this offering will be sufficient to enable us to implement our strategy. This complexity and uncertainty will be increased if less than the maximum amount of securities offered in this offering is sold. The Company intends to raise additional capital in the future from investors. Although capital may be available for early-stage companies, there is no guarantee that the Company will receive any investments from investors.
Runway & Short/Mid Term Expenses
New Way Homes, Inc. cash in hand is $363,609.98, as of May 2020. Over the last three months, revenues have averaged $19,225/month, cost of goods sold has averaged $0/month, and operational expenses have averaged $25,150/month, for an average burn rate of $5,925 per month. We do not intend to be profitable.
Since 12/31/19, there are few material changes or trends in our finances or operations. A new impact investment loan for $500,000 closed in early May 2020 with approved uses for providing loans for the development of affordable housing, to directly pay for affordable housing development owned by New Way Homes and for general operating expenses related to these purposes. New Way Homes provided loans to two organizations that repaid those loans in February 2020 ($50,000 plus interest) and April 2020 ($15,000 plus interest).
New Way Homes expects our revenues to include interest earned from impact investment loans made and to increase contributions through this raise. Expenses are expected to include project expenses for two New Way Homes owned projects. After the close of the raise, revenues and expenses for one month are projected to be $37,000 in revenues and $32,000 in expenses.
All current sources of capital are listed under Debt in Past Raises. New Way Homes has received two commitments for $1,000,000 each towards our permanent supportive housing project.
Residential Real Estate Assets may experience catastrophic events or major market value changes or changes in debt financing markets.
Events such as natural disasters, fires, the COVID-19 health & economic crisis, sudden economic downturns, or other events may cause significant loss of value to the real estate assets of NWH’s borrowers and/or a sudden need of capital. Over time, it is possible that the multifamily residential rental real estate market in California will change significantly; if rents go down, or if they increase much slower than historically has been the case, then a project may not be able to afford sufficient replacement reserves, operating funds, or debt service payments.
NWH’s operations are subject to regulation.
NWH’s operations are subject to federal, state, county, local and other regulations that are subject to change without notice. In addition, there may be other legal, tax and/or regulatory changes that NWH may or may not be able to foresee that may materially affect NWH. Further, NWH’s borrowers will engage in development projects whose success is dependent upon the approval of local jurisdictions and regulatory bodies, including for variances relative to current regulations. Any given development project may not get the approvals anticipated, and therefore may lose the benefit of significant expenditures, such as acquiring or optioning properties, preparing projects, and seeking approvals.
NWH’s financial model and project plans may not be accurate or successful.
Real estate development projects carry significant risks, such as legal risks, approval risks, contractor performance risks, and risks related to unanticipated issues with a building site (e.g. pollutants, geologic characteristics, archeological value, etc.).
Maintenance, utility, compliance, property management, variable interest rate, or other expenses may significantly exceed anticipated levels.
NWH is dependent on key personnel.
NWH’s day-to-day operations are conducted by Sibley Verbeck Simon. The organization’s future operations may depend upon its ability to attract and retain highly skilled personnel and board members, of which there is no guarantee.
Prices of construction labor and materials can fluctuate significantly due to changes in demand and supply. The costs, availability, and quality of materials and services can increase a project's costs and therefore reduce the project’s ability to repay NWH.
NWH’s borrowers (the housing projects) might not be able to service their debt obligations or might have other financial difficulties.
PSEs will have debt from other lenders, and the debt to NWH will typically be subordinated to such debt to third parties. No assurances can be made that these entities will be able to achieve their operating or financial projections or that they will be able to service their debt, including the Notes. Repayment of Notes in particular may rely on the borrower’s ability to refinance or obtain other debt, of which there is no guarantee at the time Notes become payable.
There may be conflicts of interest with NWH Management, directors, and affiliates.
Sibley Verbeck Simon, President, will, and others who will serve on the Board of Directors of NWH and control NWH, may have interests in a variety of activities other than NWH. Accordingly, conflicts may arise in the allocation of time between NWH and one or more of these activities and in the involvement in or ownership of related entities. Potential conflicts of interest could exist or may develop in the future among NWH, its Note holders, its land partners, and/or any affiliate of the foregoing, which should be considered carefully by each potential Note holder.
Our success and ultimately the repayment of investor loans is dependent upon raising the additional capital needed for the construction of projects, in most cases both as debt and equity capital or in some cases as donations to the charitable projects. There can be no assurance that such funding will be available or will be available on favorable terms.
To date there have been no legal claims against NWH or any of the development projects it has funded. However, it is not uncommon for development projects to lead to legal disputes, and even when those disputes are between third parties and local jurisdictions, NWH may be required or it may be in NWH’s best interest to participate in or fund legal defense or related activities. NWH’s insurance may not adequately cover these claims and even if such claims are unsuccessful, the costs incurred in defending against these claims, in terms of the money and the time and distraction of NWH Management, could have a material adverse effect on our business, results of operations or financial condition.
Affordable multifamily rental housing development and operations in some cases rely on the Federal and State Rental Subsidy Vouchers and associated public policy.
James Rector and Robert Singleton are part-time officers. As such, it is likely that the company will not make the same progress as it would if that were not the case.
Our future success depends on the efforts of a small management team. The loss of services of the members of the management team may have an adverse effect on the company. There can be no assurance that we will be successful in attracting and retaining other personnel we require to successfully grow our business.
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