Flashcards
Week O Cue Cards
Flashcards do conjunto (16)
- 1Development is the least riskiest sector within Real Estate T/FFalse
It's the RISKIEST - 2What are the 7 steps of the Land Development Process1. 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 - 3If a project is rejected by appeals, you have two options1. Change Plan
2. Appeal to Ontario Municipal Board - 4How are subdivisions financed?Blanket loans that are then sold off as people buy lots
- 53 Steps of the Financing Cycle1. Business Costs
2. Costs relate to project initiation
3. Construction Loan - 64 Steps of Development of Rentals/Condo Buildings1. Get the Idea
2. Get the Financials
3. Construction
4. Get it done + Open - 7What is Mezzanine FinancingDebt capital that gives lender the rights to convert to an ownership or equity interest in the company if loan is not paid back
- 8Two types of Construction CostsHard Costs: Servicing land/Construction
Soft Costs: Engineers, Surveying, Designs - 9Things lenders look for in a developer to lendDevelopers track record, viability of project etc.
- 10Permanent loan (Take out loan) is used to take out the construction loanDeveloper must provide lender with evidence of satisfactory completion and minimum level of rentals
- 11The permanent loan usually has a higher interest rate than the construction loan T/FFalse
Permanent loan is secured/backed by building so it can charge lower interest rate - 12What can go Wrong during development?-Labour Shortages
- Unexpected Costs
-Market Change, Low demand etc
- Environmental/Planning Changes etc
WORST THING: Planning Approval not Received - 13What is an Official Plan?Broad plan set out by City involving your basic land uses and forecasts (changed by municipality and ruled by province)
- 14What is Zoning?Site by Site/Lot by Lot specific rules and Restrictions
- 15How 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 - 16How 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