A Service for the High Mobile

As stated in previous sections, Tadaima Co-ownership brings the 5 Year Rule down to 1. We do this to bring home ownership to the highly mobile. But as we saw in the previous sections, there's huge costs that come with trying to own a home and obligations that come with that to make it worthwhile in the long run. In the content to come we'll go over 1) How Sequential Co-ownership rearranges the pieces to be more cost effective, and 2) model that financially over time to see how it performs.

Trimming the Fat

If there's anything that you get out of everything that is to come, it is that the main tradeoff Tadaima takes is mobility over agency. In essence, the current homeowner market in the US is maximized for agency, but at the cost of our mobility. By letting go of that, we can trim costs way down to move things from 5 years down to 1.

Cutting Counterparty Risk

In our section Sequential Co-ownership we explain what our service is and how it hopes to realign incentives between buyer and seller to be cooperative vs competitive. What this does structurally is eliminate a large part of the Counterparty Risk that is an inherent part of every real estate transaction. It doesn't remove all of it, but it hopefully reduces a huge chunk of it. This hopefully removes the following costs:

• Realtor Commission

• Home Inspection

• Home Appraisal

Removing Redundant Buying Power

With every real estate transaction, the Seller most likely already has a mortgage on the home. The Buyer most likely will have to get a mortgage to purchase the home with. Instead of getting a new mortgage every time like with traditional ownership, in Tadaima we share the same mortgage. By relaying one mortgage between individuals, we hopefully removing the following costs:

• Loan Origination

• Title Insurance & Search

• Intangible Tax

and in it's place we replace those costs with an alternative that is much cheaper:

• Loan Assumption Fee

Initial Investment Swapping

After removing some costs from the system, we're still left with a few costs we can't eliminate. What we can't eliminate, we account for. Following our assumptions again, after 10 years, we have a excess of cash from our investment. We can reimburse those costs before we payout any equity. Of the costs that are to be reimbursed, we have two separate accounts for each:

• Fixed Accounts - are fixed to the spender for the life of the home.

• Rollover Accounts - rollover accounts start with the initial spender, but then rollover to each subsequent co-owner.

Rollover Accounts

Rollover accounts are for expenditures that we view as unfair for any one person to hold for the life of the home, and especially if they're not the current occupant. How a rollover accounts works:

• A capital expenditure is made that get's classified in a rollover account (ex. down payment)

• The holder of that account maintains that deficit until they move out

• To move in, the subsequent co-owner must pay in the current balance of all rollover accounts

• The holder of the rollover account is reimbursed for their deficit; and then the rollover account and it's balance is transferred to the incoming co-owner.

An example of something that we account for in a rollover account would be the down payment (even though technically it's not a cost). Classifying it as a rollover account, they only maintain the deficit that comes with a down payment for just their duration in the home, and then it's handed off to whomever next lives in the home.

Fixed Accounts

Fixed accounts are for expenditures that are more often than not ad-hoc, optional, or for minor expenses. Examples of these are:

• Special Assessments - levied by county or by HOA to fund community repairs or improvements

• Home Improvements - New appliances, smart lights or blinds, new drywall, paint, or electrical wiring

We need to address these somehow. We have two ways we can do this 1) We can delay costs, and 2) we can distribute costs, and we 3) detail costs.

Delay Costs

remember how in the previous section we didn't consider down payment as one of the costs? That's because we assume in a loss-less transaction you should get that value back. Since each subsequent co-owner is benefiting from the initial co-owner paying all the costs to acquire the home (loan origination, appraisal, inspection, etc), we need to equalize for that.

The Final Product

Cutting Exit Costs

In exiting a real estate investment, the major cost in the US is paying for the services of real estate agents. In our previous section we estimated the costs of real estate agent services to be roughly $30,000 to $36,000. Simply saying "oh we just won't use real estate agents," and thinking that'll do the trick is over simplifying things.