Vest Pocket Guide to Real Estate Development
A Guide to Wealth for the Average Joe!
Outline
Development Projects
Overview
Key Words Important Terms
Process of Analysis
Concept Creation
Capital Cost Estimation
Cost per SF Approach
Hard Money Take-off
Factor Methods
Land Values
Analysis of Financial Statements
What are Financial Statements?
What do they tell me?
Re-casting the Numbers.
Valuation of Income Properties
How to Value: Income, Cost, Comparables
Proforma Forecasts
Capitalization (CAP) Rates
Leasing Strategies and Structures
Purchasing Strategies and Structures
Build and Sell
Build and Hold (Lease)
Land Leasing
Financing Structures: Banker Mentality
Justification of Purchase: Final Reality Check: Does this make sense?
Overview
Developing or investing in real estate requires the successful integration of several skill sets, these include:
Working knowledge of real estate markets, i.e., price trends, local growth patterns, competition for your real estate project, land values, etc.
Basic valuation and financial skills to assess and analyze the project (or property) in question. Does it make money? What returns are likely to investors, like yourself, and others? What capital is required for land acquisition, construction, end mortgages, operating accounts, and contingencies?
Basic design and construction knowledge. This skill set provides the background and starting point for much of the transactional and financial decisions that must be made throughout the development process. An up-to-date knowledge of local codes, construction techniques and cost, time schedules to achieve various types of construction, and the likely problems always associated with construction are vital. A sense of what is and is not good design is important. A radically new and different look may not always be the best choice to meet cost and acceptance objectives by prospective tenants and or buyers.