REFM's How Developers Price The Dirt
Upcoming SlideShare
Loading in...5
×
 

REFM's How Developers Price The Dirt

on

  • 4,302 views

In this free 30-minute session, we will answer the question: how does a real estate developer know what to pay for a piece of developable land? Participants will learn the basics of real estate ...

In this free 30-minute session, we will answer the question: how does a real estate developer know what to pay for a piece of developable land? Participants will learn the basics of real estate development residual land valuation for both income-producing assets and unit sales assets, as well as the principles of valuation through comparable sales (comps). Participants follow along in Excel in real time and perform exercises to ensure they are grasping the lesson and are mastering the technical skills being taught. Participants are able to ask their questions in real time to have them answered by the Instructor on a rolling basis.

Statistics

Views

Total Views
4,302
Views on SlideShare
958
Embed Views
3,344

Actions

Likes
3
Downloads
104
Comments
0

5 Embeds 3,344

http://www.getrefm.com 3248
https://www.getrefm.com 71
http://feeds.feedburner.com 22
http://www.slashdocs.com 2
https://www.google.com 1

Accessibility

Upload Details

Uploaded via as Adobe PDF

Usage Rights

© All Rights Reserved

Report content

Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
  • Full Name Full Name Comment goes here.
    Are you sure you want to
    Your message goes here
    Processing…
Post Comment
Edit your comment

REFM's How Developers Price The Dirt REFM's How Developers Price The Dirt Presentation Transcript

  • Real  Estate  Financial  Modeling’s     How  Real  Estate  Developers  Price  The  Dirt:  Residual  Land  Valua>on  and  Comparable  Sales     Instruc(on  by  Bruce  Kirsch   Principal,  Real  Estate  Financial  Modeling     Copyright  ©  2012  by  Real  Estate  Financial  Modeling,  LLC.    All  Rights  Reserved.       www.GetREFM.com  
  • Real  Estate  Financial  Modeling  –  Model  For  Success  CLICK TO EDIT MASTER TITLE STYLEwww.GetREFM.com   2  
  • TODAY’S  PROMOTION   Coupon  for  25%  Off    CLICK TO EDIT MASTER TITLE STYLE Any  Webinar  Purchase  This  Month:    www.GetREFM.com   3  
  • This  Month’s  Webinars  –  Take  25%  Off!   •  Truly  Understanding  IRR  –  Tomorrow  4/10  at  CLICK TO EDITM  Understand  STYLE 12:30  P MASTER TITLE IRR  once  and  for  all     •  Bootcamps:  Build  up  your  hard  skills   •  Excel  For  Real  Estate  –  Mon  4/16  at  1:30  PM   •  Real  Estate  Finance  –  Tues  4/17  at  1:30  PM   •  Joint  Venture  Partnerships  –  Wed/Thurs   4/18-­‐4/19  at  1:30  PM  both  days  www.GetREFM.com   4  
  • TODAY’S  PROMOTION   Coupon  for  25%  Off    CLICK TO EDIT MASTER TITLE STYLE Any  Webinar  Purchase  This  Month:    www.GetREFM.com   5  
  • To  What  Extent  Can  The  Developer  Control  The  Following?   •  Hard  Costs   •  Global  Commodi(es  Prices  CLICK •  Construc(on  TITLE STYLE TO EDIT MASTER Labor  Costs   •  SoO  Cost  Service  Provider  Costs   •  Cost  of  Construc(on  Debt   •  Investor  Returns  Requirements   •  Land  Cost  www.GetREFM.com   6  
  • To  What  Extent  Can  The  Developer  Control  The  Following?   •  Hard  Costs  –  Very  Licle   •  Global  Commodi(es  Prices  CLICK •  Construc(on  TITLE STYLE TO EDIT MASTER Labor  Costs   •  SoO  Cost  Service  Provider  Costs  –  Licle   •  Cost  of  Construc(on  Debt  –  Licle   •  Investor  Returns  Requirements  –  Licle   •  Land  Cost  –  Poten>ally  More  Than  A  Licle  www.GetREFM.com   7  
  • To  What  Extent  Can  The  Developer  Control  The  Following?   •  Hard  Costs  –  Very  Licle   •  Global  Commodi(es  Prices  CLICK •  Construc(on  TITLE STYLE TO EDIT MASTER Labor  Costs   •  SoO  Cost  Service  Provider  Costs  –  Licle   •  Cost  of  Construc(on  Debt  –  Licle   •  Investor  Returns  Requirements  –  Licle   •  Land  Cost  –  Poten>ally  More  Than  A  Licle  www.GetREFM.com   8  
  • How  Is  Land  Different  From  Other  Development  Costs?   •  No  site  receives  a  constant,  high  volume  of   purchase  offers  every  month  of  every  year  CLICK TO EDIT MASTER TITLE STYLE •  Every  site  is  unique  with  respect  to   loca(on,  and  physically,  and  sites  oOen   have  zoning  restric(ons  limi(ng  the   allowable  uses  that  can  exist  on  the  site   •  Because  the  real  estate  market  operates   within  a  cycle  www.GetREFM.com   9  
  • In  Other  Words…   •  Land  is  the  ul>mate  illiquid  asset  CLICK TO EDIT MASTER TITLE STYLE •  Land  sellers  should  feel  very  lucky  when   they  get  a  offer  that  would  actually  go  to   closing  at  the  price  offered!  www.GetREFM.com   10  
  • Residual  Land  Valua>on  Basics   •  Developers  use  residual  land  valua(on  as  one  method  of   deciding  what  to  pay  for  a  development  site  CLICK TO EDIT MASTER TITLE STYLE Element Estimated  Income less   Estimated  Cost  excl.  Land less   Required  Equity  Return =  Residual  Land  Valuewww.GetREFM.com   11  
  • Residual  Land  Valua>on  Basics   Element Developers  Internal  MonologueCLICK IncomeEDIT MASTERcan  I  build?  What  can  I  get  in  income  (rent/sales)?Estimated   TO What   TITLE STYLEless   Estimated  Cost  excl.  Land What  will  it  cost  me  in  total  to  build,  operate  and  lease  up/sell  out?less   Required  Equity  Return What  pre-­‐tax  margin  do  I  and  my  investors  need  to  make?  *=  Residual  Land  Value This  is  what  the  land  is  worth  for  the  contemplated  project*  For  income-­‐producing  properties,  this  is  measured  as  Yield  on  Cost:  NOI  /  Total  Project  Cost      For  unit-­‐sales  projects,  this  is  measured  as  Profit  Margin:  Net  Cash  Flow  /  Gross  Sales  Proceedswww.GetREFM.com   12  
  • Residual  Land  Valua>on  Process   •  First  pass:  Back  Of  The  Envelope  analysis  (also  known  as  a  “sta(c”   analysis,  meaning  that  we  are  not  taking  the  passage  of  (me  into   account).     •  Make  inputs  for  all  variables,  including  Land  Cost  CLICK • TO EDIT MASTER TITLEnput  un(l  the  target  returns   Make  changes  to  Land  Cost  i STYLE thresholds  are  met  (i.e.,  the  economics  of  the  project  work).   •  If  this  Land  Cost  is  not  something  you  think  the  land  seller  will   entertain  as  the  purchase  price,  move  on  to  evalua(ng  the  next  site.   •  If  the  Land  Cost  is  something  that  you  think  the  land  seller  will   entertain,  proceed  to  running  a  mul>-­‐year  projec>on  model,  also   known  as  a  pro-­‐forma,  that  will  allocate  project  costs  and  asset-­‐ generated  income  over  (me,  and  use  the  Net  Present  Value  and   Internal  Rate  of  Return  measurements  to  fine-­‐tune  the  amount   which  you  will  offer  as  the  land  Purchase  Price.  www.GetREFM.com   13  
  • Residual  Land  Valua>on  Process  CLICK TO EDIT MASTER TITLE STYLE Back Of The Iterate By Promising? Envelope Changing Run DCF Analysis Variables Analysiswww.GetREFM.com   14  
  • Residual  Land  Valua>on  Process  –  DCF  Analysis   123 Main Street, Chicago, IL Condominium Building Development Assumptions - 4/9/2012 BUILDING INFORMATION DEVELOPMENT USES OF FUNDSProperty Address 123 Main Street, Chicago, IL % Total $/Unit $/GSF TotalLot Square Footage 14,000 SF Land and Acquisition Costs 6.00% Deposit 16.82% $96,154 $59.52 $3,750,000Allowable FAR 4.5 FAR Hard Costs excl. Contingency 53.83% $307,692 $190.48 $12,000,000Total Above-Grade Gross SF 63,000 GSF Stories 8 Stories Addtl Market Rate Unit Finishes $7,000/Unit Premium 1.10% $6,282 $3.89 $245,000Retail A 4,000 GSF Hard Costs Contingency 10.00% 5.49% $31,397 $19.44 $1,224,500Retail B 4,000 GSF Total Retail Land and Total Base Building Hard Costs 60.43% $345,372 $213.80 $13,469,500Retail C 4,000 GSF 12,000 GSF Retail Tenant Improvements and Leasing Commissions 1.77% $395,200CLICK TO EDIT MASTER TITLE STYLEResidual Gross Square Feet of Residential 51,000 GSF Soft Costs incl. Contingency 13.46% $76,923 $47.62 $3,000,000Salable Square Feet of Residential 85.0% Efficiency 43,350 SSF Total Units Developer Fee 3.00% of Land/Hard/Soft 2.77% $15,857 $9.82 $618,441Residential Units * Affordable 4 Units Market Rate 35 Units 39 Units FF& E 0.45% $2,564 $1.59 $100,000 Average SF 525 SF Average SF 775 SF 749 SF Financing Costs excl. any Operating Deficit 4.29% $24,547 $15.20 $957,323Podium/Garage Parking 48 Spaces Total Uses of Funds 100.00% $571,550 $347.54 $22,290,464Surface Parking 0 Spaces Operating Deficit (including Deficits Paid by Cash Flow) $0Number of Storage Units 30 Units Total Uses of Funds with Operating Def. $353.82 $22,290,464* See Unit Mix and Pricing Tab Total Uses of Funds including Deficits funded by Property Cash Flow $22,663,107 PROJECT TIMING AND SALES VELOCITY ASSUMPTIONS DEVELOPMENT SOURCES OF FUNDS Value Value Month # DateAnalysis Start Date Mo. 1 11/1/2011 % of Developer % of Total Initial Share of any % of Total EquityDate of Land Contract Execution 1/1/2012 Equity Equity Equity Investment Deficits * Cost w/DeficitsLand Deposit Date 1/1/2012 Sponsor/Developer 25.00% 4.17% $200,000 $18,392 $218,392Land Closing Date 4/1/2013 Equity Partner (if Any) 75.00% 12.50% $600,000 $55,177 $655,177# Months of Pre-Construction After Analysis Start 24 Months Third Party Investor 83.33% $4,000,000 $367,850 $4,367,850# of Months of Pre-sale Closings 2 Months Sponsor Land Equity Contribution 0.00% $0 $0 $0Construction Duration/Construction Start 12 Months Mo. 25 2/1/14 Equity Total 100.00% $4,800,000 $441,420 23.51% $5,241,420Pre-Sales Begin Mo. 0 NA Debt Closing Date % of TotalPre-Sales Duration/End Month 0 Months Mo. 0 NA Land Loan 4/1/2013 9.0% Interest Current PMTs Cost $300,000 Pre-Sales % Sold/Velocity/# Units 0% 0 Un its /M o . 0 Units Mortgage Recording Tax 1.00% Origination Cost - Paid in Cash 1.00%Market Sales Velocity/Begin 5/Month Mo. 35First C of O Received Mo. 35 9/1/14 Mezzanine Loan 1/1/2014 12.0% Interest 8.97% $2,000,000Sales Through the Month Prior to First C of O 0% Total 0 Units Mezzanine Loan Broker Fee 1.00% Sales Duration/Velocity 35 Months 0/Month Loan Fees - Front End 1/1/2014 1.00%Final C of O Received/End of Construction Mo. 37 11/1/14First Move-Ins Mo. 36 9/1/14 Senior Loan ** 2/1/2014 5.0% Interest 67.51% $15,049,045Sales After First C of O 100% Total 35 Units Mortgage Recording Tax 1.25% Sales Duration/Velocity 9 Months 3.89/Month Loan Fees - Front End 0.25% Loan Fees - At Draws 1.00%Market Sales Velocity/ Completion Timing 4.88/Month Mo. 43 5/1/15Sell Out # Months from First C of O / Total Sell Out Period 8 Months 52 Months Debt Total (excludes any Land Loan) 76.49% $17,049,045 Total Sources of Funds (excludes any Land Loan) 100.00% $22,290,464 Sample REFM Excel Model Template www.GetREFM.com   15  
  • Residual  Land  Valua>on  Process  –  DCF  Analysis   123 Main Street, Chicago, IL Condominium Building Revenue and Operating Assumptions - 4/9/2012 RESIDENTIAL COMPONENT REVENUES BUILDING OPERATING ASSUMPTIONS Residential Units Average Price Average SF Existing Rental Property Annual NOI $0 Pre-Sale (All Market) 0 Units $0 $0 PSF 775 SSF Annual Growth Rate 1.00% Market Rate 35 Units $525,000 $677 PSF 775 SSF Annual Inflation Rate for Operating Expenses/Deficit 3.00% Affordable 4 Units $300,000 $571 PSF 525 SSF Annual Operating Expenses/Unit after First C of O $5,000 Total 39 Units Real Estate Taxes on Residential Units Blended Non Pre-Sales * $501,923 $670 PSF 749 SSF Average Assessed Value $400,000CLICK TO EDIT MASTER TITLE STYLE * Market & Affordable Tax Rate Annual Real Estate Taxes/Unit after First C of O 1.27% $5,080 Revenue Deposit Amount 5.00% Amount Residential Units Excluding Options Pre-Sales Discount 10.00% $19,575,000 RETURNS (CALCULATED OFF OF MONTHLY CASH FLOWS) Options Income All Units $10,000/Unit $390,000 Podium/Garage Parking 48 Spaces $40,000 $1,920,000 Sponsor/ Equity Third Party Total Surface Parking 0 Spaces $0 $0 Developer Partner Investor Project Storage Units 30 Units $5,000 $150,000 Gross Revenues $22,035,000 Equity Investment $200,000 $600,000 $4,000,000 $4,800,000 Selling Costs 5.00% ($1,101,750) Net Return on Equity $356,293 $105,682 $1,396,870 $1,753,163 Total Residential Component Revenues, Net $20,933,250 Multiple on Equity 1.41x 1.38x 1.32x 1.33x IRR 10.30% 9.88% 11.56% 11.27% RETAIL COMPONENT INCOME, TI AND LC ASSUMPTIONS NPV off of Monthly CFs 8.00% $403,407 NNN Rent TI Allowance TI Start Month # TI Schedule IRR Kicker Return Hurdle 1.00% Retail A $25.00 $15.00 Month 24 2 Months Land Owner Participation % 0.00% Retail B $20.00 $25.00 Month 26 3 Months Retail C $32.00 $35.00 Month 28 2 Months NOTES Leasing Commissions Term Retail A 4.00% 7 Years Retail B 4.00% 5 Years Retail C 4.00% 10 Years LC Payment Lead Time * 3 Months * # of months prior to TI Start Month NOI Start Month Sale of Retail in Month Month 52 Retail A Month 26 Cap Rate at Sale 9.00% Retail B Month 29 Selling Costs 4.00% Retail C Month 30 Retail Condo. Net Proceeds $3,319,982 Sample REFM Excel Model Templatewww.GetREFM.com   16  
  • Residual  Land  Valua>on  Basics   ElementCLICK TO EDIT MASTER TITLE STYLE Element Estimated  Income Estimated  Income less   Estimated  Cost  excl.  Land less   Estimated  Cost less   Required  Equity  Return less   Residual  Land  Value =  Residual  Land  Value =  Required  Equity  Returnwww.GetREFM.com   17  
  • Residual  Land  Valua>on  Basics   ElementCLICK TO EDIT MASTER TITLE STYLE Element Estimated  Income Estimated  Income less   Estimated  Cost  excl.  Land less   Estimated  Cost less   Required  Equity  Return less   Residual  Land  Value =  Residual  Land  Value =  Required  Equity  Returnwww.GetREFM.com   18  
  • Residual  Land  Valua>on  Basics   ElementCLICK TO EDIT MASTER TITLE STYLE Element Estimated  Income Estimated  Income less   Estimated  Cost  excl.  Land less   Estimated  Cost less   Required  Equity  Return less   Residual  Land  Value =  Residual  Land  Value =  Required  Equity  Returnwww.GetREFM.com   19  
  • How  Our  Back  Of  The  Envelope  Models  Work   ElementCLICK TO EDIT MASTER TITLE STYLE Element Estimated  Income Estimated  Income less   Estimated  Cost  excl.  Land less   Estimated  Cost less   Required  Equity  Return less   Residual  Land  Value =  Residual  Land  Value =  Required  Equity  Returnwww.GetREFM.com   20  
  • How  Our  Back  Of  The  Envelope  Models  Work   ElementCLICK TO EDIT MASTER TITLE STYLE Estimated  Income less   Estimated  Cost less   Residual  Land  Value =  Required  Equity  Returnwww.GetREFM.com   21  
  • Example  1:  Office  Building   Value What  Can  I  Build?  W hat  Is  Required? Lot  Square  Footage 25,000  SF Total  Allowable  FAR 8.0  FAR 200,000  FAR Less  Retail  Square  Footage 12,000  SF Residual  Office  GSF 188,000  GSF Rentable  Office  SF 91% Efficiency 171,080  RSFCLICK TO EDIT MASTER TITLE STYLE Required  Parking  Spots  per  1,000  RSF 1.20 205  s pots What  Could  I  Generate  In  Net  Operating  Income? Average  Annual  Rent  PSF  Full  Service  -­‐  todays  value $65.00  PSF Average  Monthly  Parking  Rent  per  Spot  -­‐  todays  value $200.00 Gross  Potential  Annual  Operating  Income  -­‐  Office $11,120,200 Gross  Potential  Annual  Operating  Income  -­‐  Parking $492,710 Less  Annual  Vacancy 5.00% ($580,646) Total  Annual  Revenue,  Net $11,032,265 Annual Operating  Expenses  -­‐  todays  value $17.00  PSF ($2,908,360) Real  Estate  Taxes  -­‐  todays  value $15.00  PSF ($2,566,200) Total  Operating  and  Taxes $32.00  PSF ($5,474,560) Retail  Component  NNN  Rent  -­‐  todays  value $35.00 $420,000 "Current"  Stabilized  Net  Operating  Income  (NOI) $5,977,705www.GetREFM.com   22  
  • Example  1:  Office  Building   How  Long  W ould  It  Take  To  Build  And  Stabilize?  /  W hat  W ould  It  Cost  To  Develop? Pre-­‐Construction  Duration 18  months Construction  Schedule 24  months Post-­‐Construction  Lease-­‐Up  Duration 21  months Total  Project  Timeline 63  monthsCLICK TO EDIT MASTER TITLE STYLE %  TPC Base  Building  Hard  Cost  &  Contingency  -­‐  todays  value $225.00  PSF 45.7% $45,000,000 Office  Tenant  Improvements  (TIs)  and  LCs  -­‐  todays  value $50.00  PSF 8.7% $8,554,000 Retail  TIs  and  LCs  -­‐  todays  value $25.00  PSF 0.3% $300,000 Soft  Cost  %  Hard  Costs,  Contingency  &  TIs 35.00% 19.2% $18,848,900 Senior  Construction  Loan  to  Total  Project  Cost 65.00% Construction  Loan  Interest  and  Operating  Deficit 6.00% 12.4% $12,186,935 Land  Cost $67.50/FAR 13.7% $13,500,000 Total  Project  Cost  (TPC) 100.0% $98,389,835 Per  GSF $492 "Current"  Stabilized  NOI  Yield  on  Cost  (Cap  Rate) 6.08% How  W ould  I  Fund  It? Senior  Construction  Loan  Amount 65.00% $63,953,393 Mezzanine  Loan  Amount 20.00% $19,677,967 Required  Equity  Amount 15.00% $14,758,475 $98,389,835www.GetREFM.com   23  
  • Example  1:  Office  Building   Income  Annual  Inflation  Factor 3.00% Expenses,  Taxes  &  CapEx  Annual  Inflation 3.00% Years  to  Stabilization 6.00  yearsCLICK TO EDIT MASTER ffice  RSF Annual  Capital  Expenditures  Budget  per  O TITLE STYLE $0.30 Future  Stabilized  NOI  after  CapEx  for  Valuation $7,288,701 Future  Stabilized  Yield  on  Cost  (Cap  Rate) 7.41% Asset  Sale  Capitalization  Rate   6.00% Future  Gross  Capitalized  Value $121,478,349 Selling  Costs 4.00% ($4,859,134) Sale  Proceeds,  Net $116,619,215 Pre-­‐Tax  Profit  on  Sale  (excludes  interim  year  cash  flows) $18,229,380 Pre-­‐Tax  Profit  Margin  (excludes  interim  year  cash  flows) 18.53% Multiple  on  Invested  Equity  (excludes  interim  year  cash  flows) 2.24x >  Go  To  Excel  www.GetREFM.com   24  
  • Example  2:  Residen>al  Condominiums  CLICK TO EDIT I  MASTERequired? What  Can   Build?  What  Is  R TITLE STYLE Ratio Value Lot  Acreage 3.00  acres Maximum  Allowable  Residential  Units 50.0  units/acre 150  units Parking  Spots  -­‐  Greater  of  Zoning  and  Market 1.20/unit 180  s pots Average  Unit  Size  -­‐  Affordable  Units 650  SF Average  Unit  Size  -­‐  Market  Rate  Units 800  SF Required  Affordable  Unit  Percentage 8%  of  units 12  units Residual  Market  Rate  Units:  138  unitswww.GetREFM.com   25  
  • Example  2:  Residen>al  Condominiums   What  Could  I  Generate  In  Income? Duration Rate Market  Rate  Product  Pre-­‐Sold 10% 14  units 3  months 5  units/mo. Market  Rate  Product  Sold  in  Regular  Sales 124  units 15  months 8  units/mo. Total  Residential  Units 150  units Storage  Units 50  unitsCLICK TO EDIT MASTER TITLE STYLE 10%  Discount Residential  Component  Sales  Price  Schedule Pre-­‐Sold Regular  Market Affordable Gross  Proceeds Residential  Units $450,000 $500,000 $175,000 $70,400,000 $563  PSF $625  PSF $269  PSF Parking  Spaces $36,000 $40,000 $7,128,000 Storage $4,500 $5,000 $247,500 Selling  Costs 4.00% ($3,111,020) Net  Proceeds $74,664,480 Per  Condominium  Unit $497,763 Retail  Condominium  Component Rentable  SF 12,000  SF Annual  NNN  Rent  PSF $35.00  PSF Annual  Rent $420,000 Retail  Cap  Rate  at  Sale 8.00% Selling  Costs 3.00% Retail  Net  Proceeds $5,092,500 Total  Net  Proceeds,  Residential  and  Retail  Combined $79,756,980www.GetREFM.com   26  
  • Example  2:  Residen>al  Condominiums   How  Long  W ould  It  Take  To  Build  And  Stabilize?  /  W hat  W ould  It  Cost  To  Develop? End  Date Pre-­‐Construction  Period  (starts  at  Todays  Date) 15  months 6/6/2013CLICK TOchedule Construction  S EDIT MASTER TITLE STYLEmonths 20   2/6/2015 Post-­‐Construction  Sales  Period  ("Regular"  Sales) 15  months 5/6/2016 Total  Project  Timeline  Through  Final  Unit  Closing 50  months Average %  TPC Base  Building  Hard  Cost  &  Contingency $200,000/unit $250.00  PSF $30,000,000 48.8% Retail  Tenant  Improvements $55.00  PSF $660,000 1.1% Soft  Costs  %  Hard  Cost  &  Contingency  &  TIs 35.00% $10,731,000 17.5% Senior  Construction  Loan  to  Total  Project  Cost 65.00% Construction  Loan  Interest  &  Operating  Deficit 6.00% $6,600,643 10.7% Land  Cost $90,000/unit $13,500,000 22.0% Total  Project  Cost  (TPC) $61,491,643 100.0% Per  Condominium  Unit $409,944www.GetREFM.com   27  
  • Example  2:  Residen>al  Condominiums   How  Would  I  Fund  It? Construction  Loan  Proceeds $39,969,568 65.0%CLICK TO EDIT MASTER TITLE STYLE Equity  Required $21,522,075 35.0% Total  Sources  of  Funds $61,491,643 100.0% Pre-­‐Tax  Profit $18,265,337 Profit  Margin 23.48% Multiple  on  Invested  Equity 1.85xwww.GetREFM.com   28  
  • Comparable  Sales  Method   •  The  other  method  of  development  site  valua(on  is  the   Comparable  Sales  (“Comps”)  method   •  What  similar  sites  have  traded  recently,  and  at  what  CLICK TO EDIT MASTER TITLE STYLE price?   •  “Similar”  means:   •  Same  uses  allowed   •  Same  submarket   •  Similarly-­‐sophis(cated  buyer  and  seller   •  Where  do  you  get  land  comps?   •  Can  you  trust  them?  www.GetREFM.com   29  
  • Residual  Valua>on  And  Comparable  Sales  Method  CLICK TO EDITvMASTER TITLE omparable  sales  should   •  Residual   alua(on  and  c STYLE be  used  in  concert  with  one  another  …Neither  is   “right”  or  “wrong”   •  Use  them  as  a  sanity  check  against  one  another  www.GetREFM.com   30  
  • This  Month’s  Webinars  At  A  25%  Discount!   •  Truly  Understanding  IRR  –  Tomorrow  4/10  at  CLICK TO EDITM  Understand  STYLE 12:30  P MASTER TITLE IRR  once  and  for  all     •  Bootcamps:  Build  up  your  hard  skills   •  Excel  For  Real  Estate  –  Mon  4/16  at  1:30  PM   •  Real  Estate  Finance  –  Tues  4/17  at  1:30  PM   •  Joint  Venture  Partnerships  –  Wed/Thurs   4/18-­‐4/19  at  1:30  PM  both  days  www.GetREFM.com   31  
  • TODAY’S  PROMOTION   Coupon  for  25%  Off    CLICK TO EDIT MASTER TITLE STYLE Any  Webinar  Purchase  This  Month:    www.GetREFM.com   32