The Community Real Estate Development Process
Transcript of The Community Real Estate Development Process
![Page 1: The Community Real Estate Development Process](https://reader036.fdocuments.us/reader036/viewer/2022081323/5852e9651a28abfa398e3c17/html5/thumbnails/1.jpg)
Overview of the Real Estate Development Process
![Page 2: The Community Real Estate Development Process](https://reader036.fdocuments.us/reader036/viewer/2022081323/5852e9651a28abfa398e3c17/html5/thumbnails/2.jpg)
Development Process
A series of steps that are required to take the idea of a development
and turn it into a completed project.
![Page 3: The Community Real Estate Development Process](https://reader036.fdocuments.us/reader036/viewer/2022081323/5852e9651a28abfa398e3c17/html5/thumbnails/3.jpg)
Community Real Estate Development Chart
Primary Steps
Forming theDevelopment
Concept
Forming theDevelopment
Concept
FeasibilityStudy
FeasibilityStudy
Deal Making:Planning &Financing
Deal Making:Planning &Financing
ProjectConstruction
ProjectConstruction
Operationor Sale
Operationor Sale
There is a major "decision point" at the end ofeach primary step.
![Page 4: The Community Real Estate Development Process](https://reader036.fdocuments.us/reader036/viewer/2022081323/5852e9651a28abfa398e3c17/html5/thumbnails/4.jpg)
The Developer
Traditional DeveloperContribute equity to the projects Own the finished products Receive the financial returns the projects ultimately generate.
Community-Based DeveloperMay or may not do the aboveMotivated by the creation of units more
![Page 5: The Community Real Estate Development Process](https://reader036.fdocuments.us/reader036/viewer/2022081323/5852e9651a28abfa398e3c17/html5/thumbnails/5.jpg)
Rule of Thumb Allocations3 Year/156 Week Project
% of total % of total timetime DurationDuration
% of % of costscosts
ConceptConcept 5%-20% 8-31 weeks 0%-5%
Feasibility StudyFeasibility Study 10%-20% 16-31 weeks 5%-15%
Planning/FinancingPlanning/Financing 15%-25% 23-39 weeks 15%-30%
ConstructionConstruction 30%-60% 47-94 weeks 40%-75%
Sales/RentSales/Rent--up (operations)up (operations) 5%-15% 8-23 weeks 5%-10%
![Page 6: The Community Real Estate Development Process](https://reader036.fdocuments.us/reader036/viewer/2022081323/5852e9651a28abfa398e3c17/html5/thumbnails/6.jpg)
Forming the Development Concept
![Page 7: The Community Real Estate Development Process](https://reader036.fdocuments.us/reader036/viewer/2022081323/5852e9651a28abfa398e3c17/html5/thumbnails/7.jpg)
Development Concept Decision Point
Five critical elementsSpecific useDesignated siteIdentified marketSpecific development teamDefined financial program
“Go/No Go/Modify decision = if “go” commit resources for estimated development costs
![Page 8: The Community Real Estate Development Process](https://reader036.fdocuments.us/reader036/viewer/2022081323/5852e9651a28abfa398e3c17/html5/thumbnails/8.jpg)
Key Questions At This Step
Who owns the development?What are we building? Is it for sale or lease?Who is on the development team?
Owner/Mortgagor Legal NameDeveloperArchitect and EngineeringAttorney Contractor
![Page 9: The Community Real Estate Development Process](https://reader036.fdocuments.us/reader036/viewer/2022081323/5852e9651a28abfa398e3c17/html5/thumbnails/9.jpg)
![Page 10: The Community Real Estate Development Process](https://reader036.fdocuments.us/reader036/viewer/2022081323/5852e9651a28abfa398e3c17/html5/thumbnails/10.jpg)
Feasibility Study
![Page 11: The Community Real Estate Development Process](https://reader036.fdocuments.us/reader036/viewer/2022081323/5852e9651a28abfa398e3c17/html5/thumbnails/11.jpg)
Feasibility Study Decision Point
Analysis of all assumptions regardingMarketSiteoperating pro formadevelopment pro formafinancial requirements, team & roles
Go/No Go/Modify decision = if “go” commit resources for feasibility study, site control
![Page 12: The Community Real Estate Development Process](https://reader036.fdocuments.us/reader036/viewer/2022081323/5852e9651a28abfa398e3c17/html5/thumbnails/12.jpg)
![Page 13: The Community Real Estate Development Process](https://reader036.fdocuments.us/reader036/viewer/2022081323/5852e9651a28abfa398e3c17/html5/thumbnails/13.jpg)
![Page 14: The Community Real Estate Development Process](https://reader036.fdocuments.us/reader036/viewer/2022081323/5852e9651a28abfa398e3c17/html5/thumbnails/14.jpg)
![Page 15: The Community Real Estate Development Process](https://reader036.fdocuments.us/reader036/viewer/2022081323/5852e9651a28abfa398e3c17/html5/thumbnails/15.jpg)
Deal Making Decision Point All elements of the project made definite.Letters of commitment, contracts, and loan documents binding all parties to specific elements of the deal, i.e. difficult for developer to back out.Go/No Go/Modify/Sell decision = authorization given to negotiate financing, enter into contracts and loans, purchase property, etc.
![Page 16: The Community Real Estate Development Process](https://reader036.fdocuments.us/reader036/viewer/2022081323/5852e9651a28abfa398e3c17/html5/thumbnails/16.jpg)
![Page 17: The Community Real Estate Development Process](https://reader036.fdocuments.us/reader036/viewer/2022081323/5852e9651a28abfa398e3c17/html5/thumbnails/17.jpg)
![Page 18: The Community Real Estate Development Process](https://reader036.fdocuments.us/reader036/viewer/2022081323/5852e9651a28abfa398e3c17/html5/thumbnails/18.jpg)
Project ConstructionSchedule of WorkPayment/Draw ScheduleInspection Schedule
Local GovernmentLendersPotential Homeowner if single-family sales
Record-Keeping Requirements
* A Pre-construction meeting with the key players to cover roles, responsibilities, conflict resolutions, change orders, and the items above helps.
![Page 19: The Community Real Estate Development Process](https://reader036.fdocuments.us/reader036/viewer/2022081323/5852e9651a28abfa398e3c17/html5/thumbnails/19.jpg)
Project Construction Decision Point
Project is completely built and all inspections are passed.If a rental project, the building is leased.Decision point = possible change from rental to for sale project
![Page 20: The Community Real Estate Development Process](https://reader036.fdocuments.us/reader036/viewer/2022081323/5852e9651a28abfa398e3c17/html5/thumbnails/20.jpg)
![Page 21: The Community Real Estate Development Process](https://reader036.fdocuments.us/reader036/viewer/2022081323/5852e9651a28abfa398e3c17/html5/thumbnails/21.jpg)
Operation/Sale Decision Point
Project is effectively rented up or sold outIt is meeting its financial and other project goalsGo/No Go decision = should we sell the project, refinance it or allow it to go into default
![Page 22: The Community Real Estate Development Process](https://reader036.fdocuments.us/reader036/viewer/2022081323/5852e9651a28abfa398e3c17/html5/thumbnails/22.jpg)
![Page 23: The Community Real Estate Development Process](https://reader036.fdocuments.us/reader036/viewer/2022081323/5852e9651a28abfa398e3c17/html5/thumbnails/23.jpg)
![Page 24: The Community Real Estate Development Process](https://reader036.fdocuments.us/reader036/viewer/2022081323/5852e9651a28abfa398e3c17/html5/thumbnails/24.jpg)
![Page 25: The Community Real Estate Development Process](https://reader036.fdocuments.us/reader036/viewer/2022081323/5852e9651a28abfa398e3c17/html5/thumbnails/25.jpg)
Deal Making Decision Point All elements of the project made definite.Letters of commitment, contracts, and loan documents binding all parties to specific elements of the deal, i.e. difficult for developer to back out.Go/No Go/Modify/Sell decision = authorization given to negotiate financing, enter into contracts and loans, purchase property, etc.
![Page 26: The Community Real Estate Development Process](https://reader036.fdocuments.us/reader036/viewer/2022081323/5852e9651a28abfa398e3c17/html5/thumbnails/26.jpg)
![Page 27: The Community Real Estate Development Process](https://reader036.fdocuments.us/reader036/viewer/2022081323/5852e9651a28abfa398e3c17/html5/thumbnails/27.jpg)
![Page 28: The Community Real Estate Development Process](https://reader036.fdocuments.us/reader036/viewer/2022081323/5852e9651a28abfa398e3c17/html5/thumbnails/28.jpg)
Project ConstructionSchedule of WorkPayment/Draw ScheduleInspection Schedule
Local GovernmentLendersPotential Homeowner if single-family sales
Record-Keeping Requirements
* A Pre-construction meeting with the key players to cover roles, responsibilities, conflict resolutions, change orders, and the items above helps.
![Page 29: The Community Real Estate Development Process](https://reader036.fdocuments.us/reader036/viewer/2022081323/5852e9651a28abfa398e3c17/html5/thumbnails/29.jpg)
Project Construction Decision Point
Project is completely built and all inspections are passed.If a rental project, the building is leased.Decision point = possible change from rental to for sale project
![Page 30: The Community Real Estate Development Process](https://reader036.fdocuments.us/reader036/viewer/2022081323/5852e9651a28abfa398e3c17/html5/thumbnails/30.jpg)
![Page 31: The Community Real Estate Development Process](https://reader036.fdocuments.us/reader036/viewer/2022081323/5852e9651a28abfa398e3c17/html5/thumbnails/31.jpg)
Operation/Sale Decision Point
Project is effectively rented up or sold outIt is meeting its financial and other project goalsGo/No Go decision = should we sell the project, refinance it or allow it to go into default
![Page 32: The Community Real Estate Development Process](https://reader036.fdocuments.us/reader036/viewer/2022081323/5852e9651a28abfa398e3c17/html5/thumbnails/32.jpg)