I am curious to know how everyone underwrites and models a multi-family(mixed use with retail) development project. For example, if you or your firm is looking to acquire a current income producing project(future development site) and has plans on taking it down in the future, how would you value the property today and moving forward? When doing pro-formas for the development project you will be constructing in 2 years from when it is bought, there are many factors to look into such as construction costs, financing etc. I am aware of software such as Argus and Yardi which assist in the feasibility of the project. Is having software a must for development since it is the most specific and hands on project there is which involve many variables rather than an income producing property?
Bottom line, if you are acquiring a future development site, what steps do you think top development companies that are building large or even smaller scale multi-family projects take in achieving forecasting even though the future is not certain. What are the most important metrics in determining yield on the project. If anyone has any input or experience it would be highly appreciated. Also, any suggestions to what software or development model to use which is a good starting point to evaluate a development site. Thanks.