Most creative ways to add value in development project

To all the developers out there. How are you creating value from construction to term loan?

1.Ideally how large is that delta in %? Ex: 2m construction loan and then getting 2.5m in take out

2.what makes for a good deal in development? Everyone talks about YOC but how much equity do you pull out in deals once stabilized? Is getting 60% of your equity great?

3.How often do you pull all of your equity out? Is this rare?
What are some things to look at for in your underwriting model that are red flags? Particularly if you're a long term owner and not looking at IRR?

 

Got it. So how do you capture all of your equity? Following years in the long run?How are merchant developers making money if they're selling before lease up? The short answer is sell the buildings for more than the combined cost of the land, soft costs, financing costs, and construction costs

 

Make sense. Thanks for clarifying and giving your input. I believe that to be the case as well. I’m assuming 5 years down the road as rents rise (hopefully that’s the case) the capture equity back. Again you’re ideally making money on NOI as well. Is this correct?

 

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