For Sale (buyer’s perspective): Providing a different perspective than that of owner, these slides provide the sales process from the buyer’s perspective. Real estate is fraught with asymmetrical information and motivations. Understanding both sides of a transaction assists significantly with negotiations.
Chapter 9
Financing Land Development: Land is a tricky real estate asset as it does not produce rents. Therefore, it can be difficult to underwrite, i.e. value. As a result, lenders, e.g. banks, have specific standards for providing loans on non-income producing assets.
Financing Project Development: The transformation of raw land into an income producing real estate product requires project financing. Typically, an acquisition (raw land), development (horizontal construction), and construction (vertical construction), i.e. ADC loan, is required. The underwriting is different from raw land.
Leasing (during development): The true value of real estate is the leases which the physical product attracts. The ability to understand the lease and attract tenants is critical. Often there are requirements, by lenders, to pre-lease during development.
Chapter 8
Valuation of Income Properties: Residential properties cover, generally, For Sale properties. Commercial properties cover For Lease and typically modelled as if not sold but held for a determined amount of years. Therefore, while the basic valuation equations are equivalent, the methodology of understanding For Lease cash flows is different.
Chapter 7
Residential Construction (Review): A general overview of residential construction. While residential and commercial real estate are considered different industries, an understanding of residential basics is critical.