This old house on Burgundy Street, New Orleans, is coming back to life.
5442 Burgundy Street is a distinctive representation of New Orleans architectural history. The single shotgun bungalow-style house is located in the historic Holy Cross district of the Lower 9th Ward. In the 1800s, bargeboard flat-bottomed boats floated down the Mississippi River carrying both people and supplies destined for New Orleans. After their journey the boats were disassembled and repurposed as houses for working class people.
This house dates back to the late 1800’s and thus is one of those pieces of the puzzle of history. The wooden bargeboards and beams of 5442 Burgundy Street have been hidden for far too long behind drywall and plaster. Bargeboards & Beams, LLC (the “Company ”) plans to expose the historic, original wooden walls and restore them back to their original condition. At the same time, they plan to stabilize and strengthen the house with additional 6 x 6 posts and beams, crafted using timber frame joinery from locally sourced Cypress.
In order to maximize the potential of this charming house, the Company also plans to build a camelback addition which will house three extra bedrooms. These extra bedrooms will permit per room rental rates that are lower and more affordable, while keeping the historic architecture of the little house intact. It will also increase the size of the house from 1100 to 1800 square feet. Alansons Development LLC (the “Manager”) plans to occupy the basement level as an office, community gathering and exhibition space.
Projected completion of the project is early June 2019.
The permitting process is in the final phase, having passed the zoning approval requirements of the Historic District Landmarks Commission. Architect Marc Berard Jr. of Entourage Design has drafted blueprints.
The Company plans to introduce sustainability and resiliency features including a living wall, geothermal climate control, a PV solar and battery bank, rainwater harvest and urban farming. All of these features form the foundation of the Manager’s business. This project serves as a template for their research and development into green technology design principles.
The income generated by this house will be through rental of rooms independently in a co-operative fashion with shared communal spaces. Three fully furnished bedrooms are planned to be available, two of them as long term rentals and one as a short term rental. The fourth room in the house has already been reserved for rental as an office. In addition a two bedroom Accessory Dwelling Unit (“ADU”) will be added to activate the remaining 40% of the property along with with food gardens and fruit trees.
The ADU is planned as an 800 square foot two story, two bedroom house harkening to the style of the historic pair of steamboat houses nearby. The structure is as a pylon stilt elevated above flood plain. The open layout and east, south, and west facing balconies create shade from summertime sun in line with Passivhaus design. The rooftop balcony is intended be used as a chef’s garden full of herbs and seasonal vegetables.
Unless otherwise noted, the images on the offering page are used to convey the personality of the neighborhood in which the project is planned. Properties shown in these images are not included in the offering, except for 5442 Burgundy, and Investors will not receive an interest in any of them.
Alansons Development LLC redevelops blighted properties using self-sustaining, green building practices while staying true to the architectural beauty of historic New Orleans. Erik Jon Holmberg, Founder and CEO of Alansons Development LLC, is Alaska born and raised. Living off the land instilled deep connection and respect for nature in him.
He first became involved in construction as a child when his family built a four story house on their homestead outside of Fairbanks, Alaska. Erik’s construction experience is deep and varied. Over the course of the past 20 years, he has become skilled in many trades, excelling in design, high-end finish carpentry, and specialty sheet metal facades. His first job in the construction industry was in commercial demolition. Taking things apart was a great way to learn how to put them together, Erik says. He has been a tradesman on projects such as MoPop (Seattle), Museum of Glass (Tacoma), Museum of Flight (Seattle), and has been a journey level member of SMWIA local 66 since 2000.
Erik’s search for green building advancement technologies has been ongoing throughout his career. Along the way, he worked for Arctic Sun/REINA for three years developing Passivhaus/Energy+ housing in one of the most adverse climates, interior Alaska. He has worked as site-supervisor on multiple projects, and within the Research and Development department drafting and fabricating superinsulation advancements, as well as developing solar thermal innovations.
In 2006, Erik purchased a run down house in Seattle and over the next 12 years slowly transformed that place into an urban oasis. He managed this building as a landlord for 10 years and as an AirBNB host for 2 years.
5442 Burgundy Street is located in Holy Cross, an historic district of the Lower Ninth Ward in New Orleans. Although the neighborhood is still laden with blighted, abandoned properties post-Katrina, it is gaining in value. The developer’s goal is to fix as many of these properties as possible, starting with 5442 Burgundy Street.
There are lots of landmarks to enjoy here. The legendary "King of Rock and Roll," Fats Domino, lived most of his life at his home just five blocks away. The "Battle of New Orleans" played out at what is now a park called Chalmette Battlefield two miles away and the Steamboat Houses and Saint Maurice Church are notable neighborhood landmarks.
Brad Pitt's "Make it Right” foundation has helped to rebuild numerous houses in this neighborhood.
The mighty Mississippi River and spacious levee park are five blocks away and are a popular and peaceful place to enjoy day or night. Expansive fields of green that are perfect for playing catch, fetch, or just to lay out and enjoy a sunny day and a gorgeous view of downtown New Orleans. Erik visits daily to run his dogs, and to fish for dinner from the river.
A 20 minute bicycle ride will bring you to the lively French Quarter. Multiple restaurants, bars, grocery stores and many other services are within walking distance.
Since Katrina, in 2005, New Orleans has grown rapidly. It’s population now stands at over 80% of pre-Katrina numbers. The housing market has not kept up with this population growth and the activation of blighted and vacant properties provides an opportunity to fill some of this need. In Holy Cross and other neighborhoods around the city there are lots of houses for sale but a dearth of rental properties. And this in turn has caused the rental market in New Orleans to be in the top 25 highest in the nation, while the city continues to have a well below national median wage. The Company wants to create affordable rental units for this underserved market.
Upon completion the Company estimates that 5442 Burgundy will be valued at roughly $450,000. Here are some current comparables:
|Address||Sales price||Date sold||Size|
|830 Lizardi Street, New Orleans, LA, 70117||$395,000||05/16 2018||3 beds, 2 baths, 2,538 square feet|
|302 Delery Street, New Orleans, LA, 70117||$520,000||06/12/2018||4 beds, 4 bath, 3,065 square feet|
|1001 Kentucky St., New Orleans, LA, 70117||$409,000||06.25.2018||2 beds, 2 bath, 1, 326 square feet|
The Company is engaged in two simultaneous offerings, with a maximum goal of $100,000, of its securities:
- An offering under Regulation CF (where anyone can invest), which we refer to as the “Reg CF Offering”; and
- An offering under SEC Rule 506(c) (where only “accredited Investors” can invest), which we refer to as the “Reg D Offering.”
We plan to use the proceeds of the two offerings, together with a loan from a bank, to purchase, renovate and operate the house at 5442 Burgundy Street in New Orleans.
In an offering under Regulation CF the issuer is required to state a “Target Amount,” meaning the minimum amount the Company will raise in the Regulation CF offering to complete the offering. For the reason just described, our Target Amount for the Reg CF Offering is $1,000.
However, we will not complete the Reg CF Offering OR the Reg D offering unless we have raised a total of at least $50,000 (minimum goal) by March 20, 2019, EST. If we haven’t, both offerings and all investment commitments will be cancelled, and all committed funds will be returned.
It doesn’t matter how much is raised in the Reg CF Offering and how much is raised in the Reg D Offering. Thus, if we raise $1,000 in the Reg CF Offering and at least $49,000 in the Reg D Offering we will proceed, and vice versa.
The minimum investment in the Reg CF offering is $500, and the minimum investment in the 506 (c) offering is $5,000. Investments above $500 in both offerings may be made in $500 increments (e.g., $1,000 or $1,500, but not $1,136). Investors can cancel their commitment up until 11:59 pm on March 18, 2019, EST. After that, any funds raised will be released to the Company and Investors will become limited partners of the Company. The Company may decide to change the Offering Deadline but will provide at least five days’ notice of such a change to all Investors. Investors will also be notified and asked to reconfirm their commitment if any other material changes are made to this offering.
Each Investor will receive 50% of cash flow annually. In addition, Investors will receive a pro-rata share of 20% of any profit on the project. This 20% is assigned to the total equity goal of $100,000. If, for example, an Investor was to invest $1,000, they would receive a 1/100th (or approximately 1.0%) pro-rata share of 20% of profits available. The Company plans to refinance the property in 3 years’ time and anticipates that the value of the property at that time will be over $450,000. See “About Investor Return” for a description of the return of equity to Investors.
- Seasoned craftsman. The developer is a seasoned craftsman and builder.
- Historic. The house was built of bargeboards in the mid-1800s and will be fully restored.
- Affordable. Cooperative housing with the goal of affordability.
- Sustainable. Features include a living wall, geothermal climate control, rainwater harvesting and a solar battery bank.
- Central. A 20 minute bicycle ride to the French Quarter.
Total acquisition and development costs are estimates to be approximately $237,000. The Manager plans to invest approximately $137,000 on the same terms as the other Investors. The Company anticipates refinancing once the project is stabilized, after three years of operations.
The financing assumptions to purchase and develop the project are as follows:
|Construction costs||(including 10% contingency)||$165,000|
|Total project costs||$236,434|
|Developer equity||58% of project cost||$136,434|
|Small Change Investors||42% of project cost||$100,000|
You can download a more detailed description of project costs here.
During the holding period the Company expects cash flow from operations to increase from approximately $35,113 in year one to approximately $36,580 in year three. The Company plans on refinancing the project after three years. You can download more detail on the operating budget here.
Under the LLC Agreement, all distributions will be made in the following order of priority, after bank loans have been repaid:
(a) First, the Available Cash shall be distributed to the Investor Members until they have received 50% of annual cash flow, after all operating expenses, replacement and debt have been paid.
(b) Second, the balance of the Available Cash, if any, shall be distributed to the Investor Members until they have received a full return of their Unreturned Investment.
(c) Third, the balance of Available Cash, if any, shall be distributed to the Sponsor, until Sponsor has received a full return of the initial Capital Contribution.
(d) Fourth, the balance of the Available Cash, if any, shall be distributed:
(1) 20 % to the Investor Members; and
(2) 80 % to Sponsor as a promoted interest.
The table below illustrates our estimate of how much an Investor would receive for a $1000 investment made under two scenarios, either a 8% market cap rate or a 8.5% market cap rate, if repaid in 3 years.
|Cap rate 8%||Cap rate 8.5%|
|Net operating income, year of sale||$36,580||$36,580|
|Less closing costs 7%||($32,008)||($30,125)|
|Less balance of loans||$0||$0|
|After sales cash available||$425,253||$400,228|
|Less return of equity to Small Change Investors||($100,000)||($100,000)|
|Less return of equity to Sponsor||($136,434)||($136,434)|
|Cash available for Distribution||$188,809||$163,794|
|Return to Small Change Investors:|
|3 years of 50% cash flow||$53,767||$53,767|
|20% after sale cash||$37,763||$32,759|
|Return of equity||$100,000||$100,000|
|Total return to Investors||$191,529||$186,526|
|Return on a $1000 investment||$1,915||$1,865|
Caution: This table is merely an illustration based on current assumptions and estimates as of the date of this offering and may change at any time based on market or other conditions and may not come to pass. All investments carry risk of loss and there is no assurance that an investment will provide a positive return. Many things could go wrong with this offering, including those listed in About the Risks below.
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.