Basic Real Estate Development Questions

[Derek G.]

Having been in the real estate and general contracting market for 9+ years I would like to have a better understanding of Real Estate Development specifics and hope to find answers to the following questions based on experience: 

1. ProForma Software – When conducting ProForma’s is there a software that is preferred to use other than an excel sheet?

2. Searching for Prospects – What have you found as the best way to look for prospects in the industry as it pertains to property/land acquisitions?

3. Assembling Land – What is the typical process to assemble land? For example, if you buy a parcel is the developer already in negotiations with the other parcel owners? Trying to understand how risk is limited in the sense of a property owner not wanting to sell that you need to complete a project/assemblage.

3. Financing of Property/Assemblage – How is land typically financed for a land development project? Interest only, investors, combined with a construction loan so the interest can be added to the construction loan, etc.

4. Software/Programs used in Real Estate – What have you found as the most useful software/programs in real estate analysis or is a third party typical involved to conduct feasibility studies or Argus Runs? 

5. When purchasing a property, what is the typical agreement as it pertains to an options period to conduct studies and determine if to proceed forward or not with the purchase?

6. What documentation is typically needed for planning and zoning? For example you have renderings, feasibility studies and presentation. Is this presented to the city prior to acquiring a property during the due diligence period or is a land use attorney or city planner used?

7. Is property typically assembled in a trust to keep people from knowing who is purchasing parcels during assemblage?

8. What is the typical target cap rate/IRR range for a hospitality, retail or apartment complex?

9. What contracts are most used during the acquisition periods? Is it a custom template or commercial contracts standardized by the state real estate board?

10. Is each development project covered under a separate LLC or Trust to protect the company? Which is most typical?

11. What is the typical time period projected to hold a property, until the IRR peaks based on analysis?

12. What is a typical structure as it pertains to investor fees and is profit sharing typically negotiated? 

Thank You, 

Derek