A potential acquisition is identified through pipeline research, existing relationships, or direct contact from the seller.
Information is gathered regarding the project (location, builder, assessment amount/term, home prices, absorption, etc.)
Relevant information is entered into S&W’s proprietary financial model which aids in the determination of the offer price.
The investment committee meets to discuss the potential acquisition, any history we have with the seller and/or builder, the performance of similarly situated projects, the market in which the project is located and a determination is made whether to pursue the opportunity.
A term sheet is issued at the determined price with closings on a semi-annual or annual basis to commence upon a minimum number of dwelling unit having been sold to the homeowner.
The contract is negotiated and executed.
The timing between contract execution and the closing can vary from immediate to 18-24 months.
The contracts typically do not include more than nominal consideration and nominal liquidated damages upon default, if any at all.