Black woman developer gets back to basics with Detroit neighborhood marketplace.
- Black woman developer. Focused on small scale development
- Black demographic. 84% Black residents
- Food desert. Bringing food to a neighborhood without
- Community centric. Anchored with a tiny, neighborhood-centric marketplace
- Terms. 8% amortizing debt. ~5 year term
- Payments begin. First quarter 2023
Many Detroit neighborhoods lack life essentials that we take for granted on a daily basis - access to healthy food and drink options, personal and home goods, and the Internet. Brinda Devine, owner of Purpose8 Real Estate, LLC (the “Company” or “P8 Real Estate”) says “We could have a long discussion on the why, but I would rather focus on a solution and create a why not.” Her “why not” is a concept called Kornr Store, and P8 Real Estate has purchased a tiny building on 6224 16th Street, Detroit, 48208 (the “Property”) to build a home for the first one.
The Property is a small, two-story mixed-use building, totalling just 1,566 s.f. P8 Real Estate has purchased the Property and is now raising funds through this debt offering, to renovate the 816 s.f. first floor into a home for the first Kornr Store, the 750 s.f. second floor into a two bedroom, one bathroom residential rental unit (the “Project”.) Sustainable features are planned along with a community green space, to be used as a meeting space for neighborhood residents, seniors, and others who live, work and visit nearby historical neighborhood anchors.
Total anticipated development cost for the Project is just under $340,000, including the purchase cost of the Property. The funds raised through this offering will supplement a bank loan of approximately $100,000 and owner equity of approximately $40,000. (See About the Finances for further detail.) Local architect Infuz Architects, have completed the necessary architectural work. No entitlements are required, a contractor has been engaged and renovation work is expected to begin in July, 2022 with completion expected in the Fall of 2022.
The first floor tenant, Kornr Store, is planning to carry a mix of life essentials including coffee, baked goods, typical foods (bread, milk, dairy products, beverages and water) along with a mixture of personal, home goods and small business products, some made by local residents. These will be available for sale both at the brick and mortar store and on the Kornr Store e-commerce website. Community activities are planned as well, through partnership with the community development organization, NW Goldberg Cares.
P8 Real Estate has been awarded a grant of $45,000 by Motor City Match. This grant will be used to begin the Kornr Store operations.
Market rental rates are planned at $20 per square foot on the first floor with the tenant being responsible for its maintenance, repairs, operations, insurance and utilities. The second floor rental unit is expected to rent for $1,200 per month, with no utilities included. Amenities planned include new stove, refrigerator and stackable washer/dryer unit. This is an affordable housing rate.
Brinda Devine, the manager of P8 Real Estate, has been in commercial real estate for over 25 years with expertise in managing portfolios of real estate asset management, assets, third-party development, agreements and commercial leases. Brinda’s expertise includes management, oversight and administration of a unique portfolio of real estate assets which have included commercial, medical office, research, clinical and retail. Her expertise includes development, acquisition and disposition of commercial real estate assets, due diligence, financial analysis, and modeling, development proformas, and creation of capital and operational budgets.
Brinda holds a Michigan Broker’s license, M.B.A in Entrepreneurship and Innovation, a Bachelors with a concentration in Finance, is active in the Urban land Institute including as a committee member of Local Small Product Council, Pathways to Diversity and is a co-founding member of the Women’s Sustainable Initiative (WSDI).
While Brinda’s commercial real estate career has primarily focused on large institutional real estate projects and leases, Brinda has chosen to focus on developing small scale neighborhood marketplaces within emerging Detroit neighborhoods.
Additional accomplishments and licenses include:
- State of Michigan Real Estate Broker,
- M.B.A., Mike Ilitch Business School, Wayne State University ,Entrepreneurship and Innovation
- Urban Land Institute (ULI), member of the Local Small Product Council and ULI Pathway to Inclusion Committee
- Larson Center for Leadership Alumni
- 2020 Capital Impact, 2020 Cohort, Equitable Development Initiative
- Institute of Real Estate Management (IREM), CPM
- National Association of Realtors (NAR)
- Metropolitan Consolidated Association of Realtors (MCAR)
- Crain’s - 50 Names to Know In Real Estate (2016)
The Property is located within the historical NW Goldberg neighborhood with quick connections to I-96, M-10 and I-75 freeways and within blocks of historical anchors including Motown Museum, Henry Ford Hospital, New Center, Tech Town and Wayne State University. The Property is also just a few blocks from a newly announced Lee Plaza senior housing development project supported by the City of Detroit. This long planned project is expected to be an economic catalyst that will encourage additional housing options for existing and new residents.
The 48208 zip code has a population of approximately 10,000 people and is a majority Black neighborhood. 84% of all residents are Black with an additional 4.6% other minority or mixed race. Median household income was just over $20,000 at the last census. The neighborhood has a large percentage of vacancies (25%) and the majority of households (53%) are rented. Approximately 21% of households own their home. Retail and restaurant options are limited in this neighborhood.
You can review a detailed market anlaysis here.
The Company is engaged in a Regulation Crowdfunding (Reg CF) offering (the “Offering”) to raise money for a real estate project in 6224 16th Street Detroit, Michigan 48208 United States (briefly describe project).
We are trying to raise a maximum of $200,000, but we will move forward with the Project and use investor funds if we are able to raise at least $25,000 (the “Target Amount”). If we have not raised at least the Target Amount by September 30, 2022 (the “Target Date”), we will terminate the Offering and return 100% of their money to anyone who has subscribed.
The minimum you can invest in the Offering is $500. Investments above $500 may be made in $500 increments (e.g., $1,000 or $1,500, but not $1,136). An investor may cancel his or her commitment up until 11:59 pm on September 28, 2022 (i.e., two days before the Target Date). If we have raised at least the Target Amount we might decide to accept the funds and admit investors to the Company before the Target Date; in that case we will notify you and give you the right to cancel.
After we accept the funds and admit investors to the Company, whether on the Target Date or before, we will continue the Offering until we have raised the maximum amount.
Total acquisition and development costs of approximately $340,000 are planned to be financed through the debt raised through this offering and a bank loan along with approximately $40,000 owner equity in the form of cash and the building. The Company anticipates refinancing the project in three to five years after operations begin, at which all investor funds, both original equity and accrued interest, are planned to be repaid.
P8 Real Estate has also been awarded a grant of $45,000 by Motor City Match. This grant will be used to begin the Kornr Store operations.
The financing assumptions to redevelop the property are anticipated to be as follows:
|Total project costs||$339,508|
|Small Change Investor debt||$200,000|
Detailed cash flow projections for the building’s operations can be reviewed here.
The Company will issue a Promissory Note for each investment made. Principal and interest shall be paid on any outstanding principal of each Note at the rate of eight percent (8%) per year, and amortized over a 25-year period. Both principal and interest payments will be calculated beginning on January 1, 2023 and paid quarterly are that.
Any outstanding principal shall be paid on either the maturity date of each Note, December 31, 2027, or upon refinancing of the Project, whichever is earlier.
A crowdfunding investment involves risk. You should not invest any funds in this offering unless you can afford to lose your entire investment.
In making an investment decision, Investors must rely on their own examination of the Companies and the terms of this offering, including the merits and risks involved. These securities have not been recommended or approved by any federal or state securities commission or regulatory authority. Furthermore, these authorities have not passed upon the accuracy or adequacy of this document. The U.S. Securities and Exchange Commission does not pass upon the merits of any securities offered or the terms of this offering, nor does it pass upon the accuracy or completeness of any offering document or literature related to this offering. These securities are offered under an exemption from registration; however, the U.S. Securities and Exchange Commission has not made an independent determination that these securities are exempt from registration.
There are numerous risks to consider when making an investment such as this one and financial projections are just that - projections. Returns are not guaranteed. Conditions that may affect your investment include unforeseen construction costs, changes in market conditions, and potential disasters that are not covered by insurance. You can download a more expansive list of potential risks here.
Over the last year the impact of COVID 19 on the construction industry has been significant. As a result, development costs have increased, negatively impacting both short- and long-term profitability and making it difficult to raise sufficient capital.
Adverse impacts include:
- Labor Shortage/Increase Labor Costs – Increase in labor costs to attract talent which subsequently impacts the profitability of existing and future real estate development projects.
- Supply Shortage – Labor shortage exacerbated delays in supplies which increased supply prices and subsequently real estate project costs.
- Delay in project construction - Creates higher development costs which reduces the projected profitability.
- Increased material costs - Inflation is currently at 8.5% and many material costs have increased by larger margins over the last few years.
- Safety Protocols - New safety protocols established by the State and the CDC increase costs for masks and sanitization.
Some positive impacts include:
- Residential rental rates remain strong since there is a huge demand for housing.
- Greater attention to structural racism.
- Greater support of Black small business owners.
- Greater willingness to support neighborhood-based real estate projects.
- Greater focus on sustainability and ESG (Environmental, Social, Governance) principles.
- More attention to channeling funds to disinvested neighborhoods.