2467884
Description
Flashcards by dylan_earl, updated more than 1 year ago
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Created by dylan_earl
about 9 years ago
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| Question | Answer |
| Development is the least riskiest sector within Real Estate T/F | False It's the RISKIEST |
| What are the 7 steps of the Land Development Process | 1. Market Analysis 2. Buy Land 3. Planning Approval/Zoning 4. Site plan/Subdivision approval 5. Demo+ Servicing 6. Pre-Selling 7. Construction OR Sell lots to be buildable |
| If a project is rejected by appeals, you have two options | 1. Change Plan 2. Appeal to Ontario Municipal Board |
| How are subdivisions financed? | Blanket loans that are then sold off as people buy lots |
| 3 Steps of the Financing Cycle | 1. Business Costs 2. Costs relate to project initiation 3. Construction Loan |
| 4 Steps of Development of Rentals/Condo Buildings | 1. Get the Idea 2. Get the Financials 3. Construction 4. Get it done + Open |
| What is Mezzanine Financing | Debt capital that gives lender the rights to convert to an ownership or equity interest in the company if loan is not paid back |
| Two types of Construction Costs | Hard Costs: Servicing land/Construction Soft Costs: Engineers, Surveying, Designs |
| Things lenders look for in a developer to lend | Developers track record, viability of project etc. |
| Permanent loan (Take out loan) is used to take out the construction loan | Developer must provide lender with evidence of satisfactory completion and minimum level of rentals |
| The permanent loan usually has a higher interest rate than the construction loan T/F | False Permanent loan is secured/backed by building so it can charge lower interest rate |
| What can go Wrong during development? | -Labour Shortages - Unexpected Costs -Market Change, Low demand etc - Environmental/Planning Changes etc WORST THING: Planning Approval not Received |
| What is an Official Plan? | Broad plan set out by City involving your basic land uses and forecasts (changed by municipality and ruled by province) |
| What is Zoning? | Site by Site/Lot by Lot specific rules and Restrictions |
| How to Mitigate Risks as a developer | -Developers should be more locally focused -Buy option on land rather than full purchase -Lease with option to buy -Phased Development |
| How does Lender Mitigate Risks? | -Complete Feasibility Analysis of development -Require presale releasing (ie. 65%) -Require financing commitment -Full Track Record assessment -Require developer to contribute more equity |
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