Starter Home Two

  • 8% annual preferred return
  • 30% profit-share
  • Investors fully paid bak
  • 22% Internal Rate of Return
  • Investment type: preferred equity
  • Medium investment horizon
Starter Home Two

Odd lots give rise to affordable housing with this two house, ground up project.

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Jonathan Tate is the manager and sole initial member of 360913 S Saratoga, LLC.  Jonathan is also the principal of OJT (Office of Jonathan Tate), an architecture and urban design practice in New Orleans, which he founded in 2011.  The office engages in numerous design-related activities, including applied research, opportunistic planning, strategic development and conventional architectural practice. Notable recently completed projects include 3106 St.Thomas, the first unit under the Starter Home* development agenda, which has received wide recognition, and Wetland Urbanism, a research and publication project that was exhibited at the 14th International Architecture Biennale in Venice. Tate is a graduate of Auburn University, where he was a multi-year participant in the Rural Studio, and Harvard University Graduate School of Design. Tate, and the practice, have been recognized as part of the 2017 Emerging Voices by the Architectural League of New York.

Jonathan and Starter Homes* have received lots of press coverage. There is lots to talk about. Curbed New Orleans has focused on the first Starter Home’s size;  Inhabit has written about its affordability;  Fast Company thinks this is a bold middle class experiment;  Uptown  Messenger really likes the wee lots and the Times Picayune focussed on the irregular lots that are the center of OJT’s attention. And to top it all off, Fast Company included the tiny Starter Home to their list of the 27 most innovative spaces and places of the year.

This is the first time that Jonathan has raised funds for a project through crowdfunding. 

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S Saratoga is one of a series of homes being developed by OJT (Office of Jonathan Tate) in New Orleans through a program they call Starter Home*.  You can read all about it on their website. This is the third project to be built in the Starter Home* program. It follows the successful completion and sale of the first Starter Home at  3106 St. Thomas Street (pictured above) and twelve more homes under construction at  3108 St. Thomas Street. The funds raised through this offering will be used to construct two new single-family homes located on two lots at 3609 - 3613 S.Saratoga Street, in Milan,  a transitioning, inner-city neighborhood of New Orleans. Milan abuts the large and historical neighborhood of Central City and is close to a number of retail corridors,  but is predominantly low-scale residential in character.

The lots, now vacant, are identically sized and approximately 73 feet deep by 24 feet wide. They are adjoined by an existing home and another vacant property. The design proposal at this time calls for a single home on each lot, each approximately 1,470 square feet with an open, off street parking spot.  The size and configuration will be refined throughout the design process. The form and look of the homes will be in keeping with the previous designs for Starter Home*.

360913 S Saratoga, LLC (the developer) a Delaware limited liability company, has been formed to develop the houses.  Jonathan Tate, who is the manager of the LLC, has purchased the land and will sell it to the LLC at cost. The project is currently in the schematic design phase, with zoning and historic district approvals still necessary.  The project timeline is anticipated to be as follows:

1 July 2017 - Completion of construction documents

15 August 2017 - Final construction estimate and general contractor selected

1 September 2017 - Anticipated closing of loans and building permits released

15 September 2017 - Construction start

15 March 2018 - Construction completed

15 March 2018 - Homes listed

1 July 2018 - Homes sold

All photographs are of 3106 St. Thomas Street, and photographed by William Crocker.


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The developer is contributing $20,000 in equity (in the form of architectural services) to the project and plans to raise another $95,000 from investors.  However, the developer will move forward with the project if only $40,000 is raised, in which case the developer will make up the difference through other sources. For this reason, the offering target amount is $40,000 with an additional $55,000 in oversubscriptions available on a first-come, first-served basis. Shares are $1 each, and investors must purchase a minimum of 500 shares each for a minimum investment of $500.  With the purchase of shares, each investor becomes a shareholder in the company.

Investors will receive an annual preferred return of 8% on their investment, which will accumulate but not be compounded.  In addition, investors will receive a pro-rata share of 30% of any company profit. This 30% is assigned to the total equity participation $95,000. If, for example, an investor was to invest $1,000, they would receive a 1/95th (or approximately .011%) pro-rata share of 30% of company profit available for distribution to investors.

Please see Investor Return for further detail and illustrations on returns.  

The offering documents include the following:

The offering will close at 11:59 pm on July 31, 2017 and investors can cancel their commitment up until 11:59 pm on July 29, 2017. After that, funds will be released to the developer and investors will become shareholders of the company.  When the target amount ($40,000) of the offering has been reached, investors will be notified.  If the target amount is reached before the closing deadline, the developer may decide to change the offering deadline, but will provide at least five days’ notice of such a change to all investors. And investors will also be notified and asked to reconfirm their commitment if any other material changes are made to this offering. If the target amount is not reached, then all investment commitments will be cancelled and all commited funds will be returned to investors.

All photographs are of 3106 St. Thomas Street, and photographed by William Crocker

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S Saratoga is one of a series of homes being developed by OJT (Office of Jonathan Tate) in New Orleans through a program they call Starter Home*.  You can read all about it on their website.  In summary  OJT has been exploring ways to use inventive land strategies coupled with thoughtful design to develop affordable homeownership in New Orleans.  They have focused on opportunities in urban neighborhoods that, due to upward economic pressures, are no longer accessible to large parts of the population.  The starter home moniker is important in that it clearly associates the program with a quintessential, albeit fading, component of the American housing market. Starter Home* is centered on research and development completed by OJT of entry level housing and takes a decidedly unconventional approach to design and urban integration to achieve the same goals -- an affordable housing product, well designed and set in the urban landscape of New Orleans. 

Photo: Starter Home* massing study

The Starter Home* program prioritizes contemporary design and programmatic diversity to address a range of buyers, from first-timers to downsizers.  The program also addresses issues such as densification through infill of overlooked odd or irregular vacant land and right-sizing as a means of addressing both environmental concerns and to ensure affordability.   In increasingly gentrifying historic core neighborhoods, Starter Homes* is a product that enables household economic diversity without the need for subsidies. 

Starter Home* is conceived as being applicable to many, if not all, cities. The first test sites are in New Orleans. Through a thorough analysis of land availability and market pressures, it was determined that there were opportunities with land that was too small or undesirable to attract first-wave developers. The design of each home works within and is expressive of the restrictive conditions of each site, resulting in fitting yet peculiar new housing type.

The first completed home under this program is located at 3106 St. Thomas Street in the Irish Channel neighborhood of New Orleans. The site is a remnant parcel, sandwiched between industrial warehouses and historic homes dating back to the beginnings of the neighborhood — a common condition in the fringes of the city, adjacent the River. This  site measures only 16 ½ by 55 feet. With as-of-right setbacks, the footprint was limited to 10 ½ by 45 feet. The site was further complicated by being in an historic district with strict guidelines for scale and massing. The formal solution for the 950 square foot home was a staggered sectional composition that allowed the rooms to layer farther from the street giving an impression of a much smaller home. The program for this initial house, one bedroom, one and a half baths with an office space, was tailored towards an individual or couple that, as a category, have found it increasingly difficult to locate available housing in this neighborhood. 

This first home is followed by 12 more currently in construction at 3108 St. Thomas Street.  The photograph above shows a model of the Starter Home* on the site at 3108 St. Thomas Street, and the photograph to the right shows construction progress. 

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Milan is a small sub-district located in New Orleans’s Central City/Garden District area. The area is close to the city’s Central Business District, the historic Garden District, the trendy Freret neighborhood and the commercial corridors of Magazine St and St. Claiborne Ave. According to wikipedia, a little more than 5,000 residents live in Milan. It is close to a number of retail areas but is a predominantly a low- scale residential neighborhood. 

Recreational and tourist attractions such as Al Davis Park, Lafayette Cemetery, Tulane University and Audubon Park are all less than three miles away from the project. The walkable neighborhood is also served by the St. Charles streetcar that provides service into the downtown district. 

According to, as of April 2017, the average listing home price for the city was $322,910 with a median rent of $1,500. For the Milan neighborhood, the average listing was $432,241 and the median rent is $1,100.

Image "Kermit Ruffins at Freret Street Festival," from Derek Bridges, via Wikimedia Commons, under CC by 2.0 license.

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  • Centrally located. The homes are in a centrally located historic and re-emerging neighborhood in NOLA.
  • Architecturally unique. Each home will be exquisitely designed to fit its urban location.
  • Much needed home product. The homes will be below market, at a price point difficult to find in NOLA.
  • Improving neighborhood. Milan has rising prices with pressure from higher-priced neighborhoods to the west and south..
  • Walkable.  The homes are located less than ½ mile from Charles Street, a major retail corridor.
  • Close to jobs. The homes are located less than ½ mile from the Charles Street Streetcar, and only 2.5 miles from downtown New Orleans, the largest job center in the region.

Photo:  Study models for private housing on a small lot in New Orleans.

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The total amount projected to build both houses on S. Saratoga is approximately $524,801.  In addition to the equity raised through this offering, it is anticipated that Home Bank will provide a construction loan of 80% of the construction cost, or approximately $409,801.  The total development cost is a total of hard, soft and land costs. Hard costs are construction costs along with a contingency set aside for unforeseen circumstances. Soft costs include any bank fees and interest, insurance, engineering, architect and developer fees, and other such  holding costs.  Projected costs for the project are detailed in the table below.

Photo:  3106 St. Thomas Street, photographed by William Crocker

Projected Costs  
Land Costs $68,000
Soft Costs  
   Appraisal $1,000
   Architect $20,000
   Bank inspector $750
   Insurance (Builder's risk and general liability $7,000
   Contingency $10,000
   Engineering $2,000
   Finance fees $3,074
   Interim interest $19,978
   Legal $3,000
   Miscellaneous $500
   Permits $2,000
   Real estate taxes $1,200
   Survey $2,800
   Tap fees $0
   Title/closing $5,000
   Zoning fees $500
Total Soft Costs $78,801
Hard Costs* $378,000
PER HOUSE $262,401

* 2 houses at 1400 square foot per house, $135 per square foot in construction costs.

Development costs will be paid for with the following funds:

  Small Change shareholders $95,000  
  Developer equity $20,000  
  Bank loan $409,801  
  TOTAL SOURCES $524,801  

Some recent sales of homes of comparable size and quality near the site are: 

Address Sales price Date Size Per s.f. Current estimate
2024 General Taylor Street $405,000 10/03/16 1485 $273 $441,275
3606 S Saratoga Street $399,000 11/03/15 1802 $221 $418,918
3523 S Saratoga Street $325,000 02/03/16 1400 $232 $289,585
3600 S Saratoga Street (off market) $434,597   1898 $229 $434,597

The developer is planning to sell each house for $220 per square foot.  This would price them under the market rate for similar houses of similar quality nearby.  In the chart below we’ve calculated the anticipated profit on sale at $220 per square foot and also at $210 and $200 per square foot in the event that this sales price cannot be achieved.  While $200 per s.f. Is well below the current market prices, unexpected economic conditions or other factors could result in lower than expected sales prices for the homes.

Sales price per s.f. $200 $210 $220
Total sales (2 houses at 1400 s.f. each) $560,000 $588,000 $616,000
Less sales commission at 6% ($33,600) ($35,280) ($39,960)
Less other transaction costs ($2,500) ($2,500) ($2,500)
Net sales $523,900 $550,220 $576,540
Repayment of bank loan ($409,801) ($409,801) ($409,801)
DEVELOPMENT PROFIT $114,099 $140,419 $166,739
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Under the LLC Agreement, all distributions will be made in the following order of priority:

  • First, investors will receive an annual preferred return of 8% on their investment that is cumulative but not compounded;
  • Second, investors will receive a full return of their investment;
  • Third, the developer will receive $20,000; and
  • Fourth, any remaining distributions will be divided 30% to investors (pro rata to their interest in the Investor Shares) and 70% to the developer.


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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 issuer and the terms of the 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 the offering, nor does it pass upon the accuracy or completeness of any offering document or literature. 

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.  Download this risk disclosure for a more expansive list of potential risks.

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360913 S Saratoga LLC is a newly formed LLC.  As such there is no previous year income tax return, and no current financial statements.  All financial activity for the LLC will begin upon construction loan closing at which time the ownership of the land will be transferred from Jonathan Tate to the LLC and the funds raised through this offering will be invested as equity in the project.   You can review the company’s financial statements here.

Jonathan Tate is the manager and sole owner of 360913 S Saratoga LLC.  Neither Jonathan Tate nor 360913 Saratoga LLC have previously raised funds through a Regulation Crowdfunding offering.  As a result there are no past reporting non-compliance issues and Jonathan Tate has no bad actor issues to report.

The Securities and Exchange Commission requires annual filing of reports depending on size of the company and the number of investors.  This report will be posted on a company website no later than 120 days after the end of the fiscal year.  Since the company will have fewer than 300 investors only one such annual report will be filed.

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