...Dream of things that
never were and ask
("Domos Ex Machina Initiative")
is a private sector attempt to supplement government programs that subsidize housing for lower income individuals and families.
The Initiative is ethical investing that is structured along strictly economic lines. The participating businesses work within their normal profit margins and standards, but they forego much of their potential profits in favor of lower rents and a unique option to buy program.
Financing, construction and property management are handled by independent Rocky Roadz REITs.
will be taking advantage of “The Tech Dividend”, the savings that result from using information technology. The methods used will include modular construction and “3D Printing”.
Those savings will enable tenants to benefit from five years of reduced rents in the row houses that Rocky Roadz REITs will be building, or rehabbing, and managing, first in Philadelphia and then in any metropolitan area in which we find suitable, local partners.
In addition to new construction, rehabs of existing structures, with most of the same features as the modular buildings, will provide extremely fair rents, more local employment, and option to purchase opportunities.
Some of the smallest rehabs will be suitable for rental, and eventual purchase, by small families.
Total monthly rent is approximately one percent (1%) of the value of the building, divided proportionally, based on each tenant's room size.
A two percent (2%) annual rent increase is anticipated. With inexpensively-rehabbed buildings, this can be as little as $300 per month, per tenant in shared housing.
This amount is enough to cover a 6% annual return to the investors, reserve accounts for repairs, a building management service, license fees, utilities, taxes, a REIT management fee, etc.
New and Improved
The American Dream Catcher
One tenant from each building will have the option of turning their efforts and commitment into their eventual purchase of the building in which they live.
The option holder will be responsible for basic building manager duties such as cleaning common areas and reporting any needs for repair or for tenant supervision. The remaining duties will be handled by a professional management company.
In return, each month, that individual will be credited with a $100 to $200 deferred payment toward their option. (If, at any time, they opt out of the program, or are terminated with cause, they will be paid one half (½) of their deferred payments).
This provision creates a home ownership opportunity that hadn’t existed before for a local resident.
For at least the five years of DEMI’s involvement, it also provides a buffer against neighborhood gentrification and its inevitable evictions and displacements.
If they exercise their option at the end of five years, option owners will also be credited with the value of the sales commission that would have been paid if a real estate agency had sold the property.
Even though their total deposit will be less than ten percent (10%) of the fair market value of their building, those credits, plus the individual's payment and management record, and, of course, the property's proven record of income should be more than sufficient for securing a reasonably priced mortgage.
Long in advance of that sale, DEMI will be establishing relationships between the option owner and local banks or credit unions to facilitate the transition and ensure that the buyer is well served and reasonably charged.
It's The Thought
that counts, and frequently pays off.
So we believe that every comment, every suggestion, every criticism, every idea gets us a little bit closer to our goals.
The world is filled with "Advisory Team" members that we just haven't heard from yet.
Please introduce yourself in the contact form (below). You probably know things that the rest of us can't even imagine.
DEMI and Rocky Roadz
are standards that are pledged by independent companies that adopt those brand names.
A "DEMI" is a new row house that contains specific features and is built using cost-saving, modern techniques. Building sites are chosen to minimize neighborhood disruptions and gentrification. Our "Go Method" of selecting locations ensures that, not only are our investors protected, but adjoining properties will also experience profitable impacts from our projects.
A "Rocky Road" is a transitional owner of a row house who pledges fair rents to tenants for five years, with an option-to-buy agreement with one of those tenants. The terms of the leases and options are virtually identical for each building.
A Rocky Road owner can be a single investor, a traditional REIT or a company that uses the new "equity crowdfunding" services.
We call this combination of features "rootsification". It's like "gentrification", but it's done for the benefit of people who have roots in the community.
are budgeted at 25% above the average for one bedroom apartments in
Philadelphia to account for the unsanctioned, but inevitable,
“couch-surfing guests” who drift in and out of North Philadelphia
housing ($0.204 / Sq. Ft. / Month for water, electricity and heat)
Rents were calculated to qualify as both “fair” and sufficient to
carry a mortgage that would be available based on the building’s fair
The floor plans were created to provide the maximum utility that can be
provided for those rents. (Those rents are only possible in a
“Dividends” are equivalent to “Debt Service”. Those dividends were
calculated to equal a 5%, 30-year mortgage because, during the initial
term of this project, rates are expected to rise to that level from the
current interest rate of less than 4%.
When each project ends, The Initiative’s annual reports will become a
five-year record of rental income and ownership expenses that are
sufficient to carry a conventional mortgage, earn a profit and continue
as a profitable business venture under new ownership.
Since the property’s new owner will probably want to raise the rents to
an amount that more closely resembles market value, the Buyer
proforma provides inflation-adjusted figures that
unfreezes the rental income and expenses to provide a future owner with
new, inflation-adjusted baselines that reflect higher, but still
“fair” rents. Of course, if they choose, they will be free to set
the rents even higher than that when they take ownership
The Initiative is structured to simplify a traditional
mortgage application process for a new owner. But the holding company
framework in Rocky Roadz creates another possible financing option with
ESOPs (Employee Stock Ownership Plans). New owners will need to decide
which method best suits their circumstances and goals.
The average of rents for both DEMI models ($581.81) represents an
affordable 29.96% of the average household income in North
Philadelphia. (but 35.2% of the median household income) We can only
target one and two-person households with rooms in shared housing or
The first-floor room of the DEMI-1 is the smallest and prices
out at $5.20 per square foot per month. The other four rooms in the
building cost $4.16 per square foot per month. In the DEMI-2 model, the
first floor units cost $4.00 per square foot per month and the four
units in the upper floors cost $3.36 per square foot per month Within
reason, tenants will have access to the basement for storage on a first
come, first served basis, without storage units provided and without
any guarantees against loss or damage. (That privilege will be
cancelled immediately if a tenant stores any items that carry any
insect or rodent infestation, present a fire or injury hazard or emit
offensive odors) All tenants will be required to sign annual leases
that are renewable at the initial rents outlined in these pro formas,
until the building ownership is transferred from DEMI to its next owner.
At this time, no security deposits are anticipated There are hundreds
of rentals in Philadelphia that are less expensive than DEMI units will
be, but none that match their value. Offering highly marketable
properties at “fair” rates should limit the losses from vacancies
and evictions, but, to keep estimates conservative, we used an eviction
estimate that is the average for metropolitan Philadelphia.
Change Since 2000
Change Since 2010
No High School
Some High School
BA or BS Degree
Under 25 $12, 288
Over 65 $16,341
Since 2000 +4%
Since 2010 0%
DEMI Floor Plans
attempt to balance the needs of tenants within the restrictions imposed by the narrow parcels of land upon which rowhouses are built.
Each model is scaleable, with a basic DEMI 1 that can be built on lots as narrow as thirteen feet and a basic DEMI 2 on lots as narrow as fifteen feet.
DEMI 1 and DEMI 2 models are shown with a rooming house floor plan. However, the preferred design will remove the inner wall of the first floor, front bedroom to create an entrance into a community living room area. This "shared housing" floor plan will require slightly higher rents, but it will create a more "family" oriented atmosphere, as well as provide a more comfortable floor plan for the building's eventual buyer.
Each model contains three floors because two floors can't support the financials that are necessary for satisfying the "affordable" portion of this program (We define "affordable" as rents that are less than 30% of the average neighborhood income.)
The DEMI 2 that is shown presents a row house with four efficiency apartments and a third floor apartment, but it will usually be constructed with two efficiency apartments on the third floor. The apartment is shown to illustrate how the option holder will probably remodel the units when that person purchases the building.
The DEMI 3 contains three identical efficiency apartments. It is scaleable for even the narrowest lots.
DEMI blue prints contain several unusual features that appeal to tenants or lower operational costs. Many achieve both.
Roof Top “Yards” A properly designed “green roof” can save energy, mitigate runoff and provide a reasonable substitute for the lack of usable yard space.
With space for tenant container gardening and seating, these green roofs, surrounded by a parapet wall, will provide a valuable space for safe relaxation. A small area, upgraded with fire retardant materials, will provide space for tenant-owned barbecue equipment.
Antennae Most lower income individuals rely on free, over-the-air television broadcasts.
A roof top antenna, with outlets in each bedroom, will provide optimal reception, while reducing the need for tenant solutions that can damage the properties.
Whole House Fan With a single fan in the roof and transoms over the bedroom doors, all the air in a multi floored building can be replaced with fresher, cooler outside air within minutes.
During periods of extreme heat, the fans can keep the air moving and provide comfort, without the expense of air conditioning.
“Scissor Staircases” For the sake of safety and visual perception, bi-directional stairs reduce injurious falls and appear less cramped than a straight staircase.
Positioned in the center of the building, they also provide safer egress if emergency escape is ever necessary.
Light Dimmers, Sensors and Timers Outside lights that are controlled by light sensors, hallway lights that dim overnight and ceiling lights in private rooms that operate through a dimmer switch provide utility savings and greater functionality for residents.
Anonymous Comments, Criticisms and Suggestions Forums on www.RockyRoadz.com will provide a comfortable resource for anonymous resident feedback and for reference by potential future tenants and “Rocky Road” partners.