1 + 1 = 3

(Results Better than the Sum of the Parts)

Who Is Covest Properties?

COVEST PROPERTIES. Inc. is a real estate Consulting and Brokerage firm headquartered in San Marcos, Ca. that creates alternative solutions for purchasing and selling real estate.

One solution is the use of an installment sale process where the Buyer gets all the benefits of ownership but does not get title until he has fulfilled the terms of an installment sale contract drawn in escrow. He is referred to as a “beneficial owner”. When the contract is complete, he obtains title like the car-buying process where title is a “pink slip”

The flexibility and universality of an installment sale (recognized as a “land contract installment sale” in all states) makes the approach superior to other “creative” solutions ( lease option, rent-to own, etc. ) for a home Buyer with “issues”. Everything depends on the contract created between the Buyer and Seller. It may include many non-standard features. For example, the Buyer may borrow funds, stage the down payment, etc.

Covest teams with deeply knowledgeable escrow specialists to complete a transaction.

Our Home Path

Another solution is a purchase using a joint venture. The Covest “Equity Sharing” joint venture is called “OurHomePath”. It was created to address a dire situation for Landlords and to provide ownership for select individuals.

The rental situation for Landlords and their heirs is deteriorating on an almost daily basis. Tenant issues, confrontations, vacancies, and increasing expenses have always been issues and now there is a large and increasing incursion of government regulations into rental ownership and tax codes that change like the weather.

Landlords are held in low esteem and it is declining while problems are increasing.

OurHomePath changes the investment character for a Landlord by allowing the tenant to purchase an interest in a property under a mutually negotiated agreement that covers the relationship. Successful negotiation of the memorandum is a requirement of the joint venture. Because the tenant is empowered and has “skin in the game”, while the relationship is tightly defined, the Landlord problems are eliminated including tenant issues, over- zealous attorneys, state legislatures and regulations, “harassment”, screening and rent control issues and property expenses. The tenant becomes a “Tenant Investor”

Tenant Investor occupies the property makes all required payments, performs repairs, and maintains property as an on-site property manager. Ownership is conditioned upon execution and completion of the terms of the agreement. Payments are via a servicing company.

So, a Landlord, his heirs and estate can continue using his/her existing rental properties as a prime investment vehicle BUT without the headaches. They are passive investors with a required ROI from the property over time and tax benefits as well.

There are over 28 million renters of single-family homes and condominiums. Covest estimates that, at any given time, 15% of them could qualify to be a Tenant Investor.

They range from business owners, divorcees with children, medical professionals, etc. A superior group from the tenants the Landlord typically chooses from.

According to a recent Harvard study, over 250,000 completed residential joint venture transactions have closed since 2004 with over 5,000 in California and several by Covest. The study opined that joint venture transactions may be the wave of the future in the U.S. as they are in New Zealand, the UK and Australia.

Joint ventures have been used in commercial real estate – joint ownership of a property with rights and benefits shared under terms of a negotiated agreement.

Its use in residential real estate has been characterized in the press as “win-win”.

Other Situations

One of the principal benefits of equity sharing or co-vesting is its ability to be modified to adapt to almost any situation.

THE STUDENT DEBT CRISIS lends itself to this as a solution because, through re-structuring, the debt can be converted into a secured loan on the property and fast loan amortization will provide capital to the student after the Investor receives the desired return REGARDLESS of whether the property appreciates or not. Covest has created just such a solution and looks forward to funding the activity.

VETERANS PROGRAMS There are may programs aimed at relieving the suffering of veterans. None, however, have taken the approach of home ownership by combining a veteran with an investor. It would seem 3 or 4 different modification models could be implemented into the housing. Using a leveraged approach with an investor and conventional lender would enable many more veterans to be served for their service.

LOW INCOME HOUSING This is precisely where Landlords get a bad name. According to statistical analysis, the tenants are, for the most part, stuck. Over an extended period, they are where they started and still burdened with the rules and regulations imposed by a landlord. Rents rise annually and, on average, they move every two years. There is no sense of pride, ownership or belonging. There is no Capital or wealth creation.

There is, at best, disdain for the landlord.

Covest will be working with housing authorities and others to change the situation for individuals and allow them to participate in all the benefits and rewards of home ownership without having to qualify for a loan.


A Mistake I Made

What Makes CoVest Properties Different?