Module 8

Crunching the Numbers

  1. How to Prepare a Development Proforma
  2. Proceeds and Income
  3. Applications of the Proceeds
    • Hard or Direct Costs
    • Soft or Indirect Costs
    • Contingency Category
  4. Cash Flows ad Preparing the Operating Proforma
    • Revenues
      • Gross Potential Income
      • Miscellaneous Income
      • Effective Gross Income
    • Operating Expenses
    • Net Operating Income
    • Below the Line Expenses
    • Net Cash Flow
    • Percentage of EGI
    • Dollars per Unit
    • Fixed Expenses
    • Variable Expenses
  5. Five-to Ten Year Operating Forecasts
    • Space Absorption
    • Inflation Increases
    • Lease Turnover Costs
    • Capital Expenditure Items
  6. Process of Refinement
    • Massing the Preliminary Numbers
    • Massaging the Final Numbers
  7. Approaches to Financial Feasibility
    • Front door Approach to Financial Feasibility
    • Backdoor Approach to Feasibility
  8. Sensitivity Analysis: “What If” Scenarios
  9. Value and Real Estate Development
    • Sales and Market Comparison Approach
    • Cost Approach
    • Income or Capitalization Approach
    • Summary of the Appraisal Approaches
    • Cost versus Market Value
  10. Projecting Taxable Income
    • Taxable Income
    • Depreciation
  11. Lender Ratios and Other Measurement Tools
    • Debt Service Coverage Ratio
    • Loan to Value Ratio
    • Breakeven Cash Flow Ratio
    • Operating Expense Ratio
  12. Financial Rules of Thumb
    • Payback Period
    • Gross Rent Multiplier
    • Effective Gross Income Multiplier
    • Net Income Multiplier
    • Before Tax Cash Flow Multiplier
    • After Tax Cash Flow Multiplier
  13. Rates of Return
    • Overall Capitalization Rate
    • Equity Dividend Rate
    • After Tax Rate
  14. Average Rates of Return
  15. Time Value Methods of Return
  16. Financial Management Rates of Return
  17. Net Present Value
  18. Development Ratios
  19. Property Measurements
  20. Using Computers to Assist the Developer
  21. How to Make the Development Value Judgment