RE Development Flashcards

RE Development Flashcards 5.6 How did real estate trade associations come about 20th century began reform and modernization of the industry To upgrade standards of practice, to isolate/ostracized/and eliminate unsavory activities NAR(National Association of Realtors), public regulation of all participants in the industry BOMA and MBA, represented owners and management 6.7 Real estate is always said to be a cyclical business.What are some of the financial cycle that have occured since 1970 Worst global recession since 2007 since the Great Depression 1990, falling prices, rents, unsold inventories, foreclosures, and bankruptcies 2.10 How might housing market be affected by population where less than 30% of all households have children under age of 18?Demand for houses will increase More than one-fourth of all households consist of a single person, and that proportion is rising rapidly. The number of traditional married-couple-with-children families has declinedsharply-from 40 percent of all households in 1970 to 20.2 percent in 2010. Only 29.8 percent of all households include any children under 18. To gauge demand, homebuilders focus on aggregate growth in the number of households in their market areas, within the context of national and regional trends. Average household size has been falling in the United States, from 3.14 persons in 1970 to 2.63 persons in 1990 to 2.59 persons in 2010 1.1 What is real estate development?the continual reconfiguration of the "built environment" to meet society's needs.The process of transforming an idea into reality.Three key elements include space, time, and services, in addition, these projects require the expertise of marketing professionals, graphic artists, sales people, Web site developers, etc.

10.8 What are the largest sources of equity capital for commercial real estate? Which has grown fastest over the past decade?A considerable portion of private equity investment has come from foreign sources, particularly sovereign wealth

funds Public equity comes from 3 major sources: Master

Limited Partnerships, C Corporations, REITS REITS have growth the fastest 1.5 What are the advantages of using such a model? What are the pitfalls?

Advantage: model is useful bc process is complex and

interactive, model can help so future ramifications of

current decisions can be easily evaluated. Disadvantage:

RED is an art so very unpredictable and all projects are different so don't exactly follow model 2.6 How does employment growth influence demand for commercial space?office construction boom was caused by shift in economy

from production of goods to delivery of services. Future:

may not see as much growth bc of employment bc growth

of service sector is in health care, don't really need multi-tenant office space. Many other financial/govt companies are focused on consolidation and cost containment

11.5 What are the primary ratios that commercial property lenders use? What risk does each ratio assess?Lenders use two majors metrics to analyze the financial

viability of the development being financed: Debt Service

Coverage Ratio (DSCR) and the Loan-To-Value Ratio

(LTVR).1. DSCR: measures the property's ability to cover

debt service payments2. LTVR: assesses the property's

collateral valueRISKS:DSCR: Lower DSCR Smaller the cushion of available NOI per dollar borrowed Higher

Lender's financial riskLTVR: Higher LTVR Larger the loan

relative to the value of the property lower the equity invested in the property greater risk to the lender 5.1 What happened to downtowns as transportation networks allowed people to move farther out of the city Also called CBD (Central Business District) As people moved outwards towards suburbs, the value of downtown real estate began to drop and many areas became extremely poor and blighted 6.2 Describe the urban renewal efforts of the 1950s and 1960s

3 steps: district replanning, urban development, urban

renewal Rebuild centrally located blighted areas- clear away underused commercial and industrial structures, move our poor residents, and replace their housing with new office towers, convention centers, hotels, shopping malls, and housing Use power of eminent domain to condemn and acquire land, demolish structures, redevelop infrastructure and public amenities, and sell land to private developers High public cost Largest investors were life insurance companies 12.3 What services can architect provide to developers at this stage (II) of the development process?Architects can provide initial building footprint on the site and determine whether the building and its associated parking can be placed on the site.the layout should also

include:- Environmental features,- Site setbacks-

Guidelines 13.5 How do developers know whether general contractors' estimates of construction costs are appropriate?Developers typically use standard industry cost guides to compile in-house cost projections to compare with local general contractors' estimates.Estimating process requires a developer to meet with individual subcontractors.

1.8 Discuss the importance of good design in developmentCrucial in establishing differences bt market segments, considers community's needs 12.4 What are market segmentation and product differentiation? Why are they important in the real estate development planning process?Developers consider the Features, Functions and Benefits offered by the competition. Segment demand and differentiate the product from the competitor's product.Idea refinement in market research can also be viewed as the process of segmenting the market and differentiating the product.It is important in the real estate development process the winning strategy will capture sufficient market share.

5.8 What strategies were used in the New Deal to revive the Great Depression Established the PWA Housing Division and the US Housing Authority to remove the worst slum dwellings and

build publicly owned rental housing