Vbteam Developer

Archive for the ‘Developer Real estate’ Category

There are two sides to a feasibility study and in an earlier article I discussed the cost side of the format and:

Now Let’s Discuss The Income Side

Without the Sales Income, All You’ve Done Is Spend Money, And Anyone Can Do That.

So that we are clear in what I am going to define for you, let me say that there are two forms of Income.

We shall be dealing with Sales Income, in this article, which in our case will consist of large amounts of money being received as a developer in exchange for the property units we have created.

The other form of income in a feasibility study, is Rental Income and will be addressed at another time when I write an E-book on Commercial Development.

Sales Income

Because of the make up of our feasibility study sheet, there will be no deductions from out Gross Sales Income, because we have allowed for those costs on the Cost Side of our feasibility study.

Items such as sales commissions for sales agents and various marketing costs have already been allowed for previously.

Now I have seen some formats of feasibility study, which deducts marketing costs from the Gross Sales Income to produce a Net Sales Income.

It achieves nothing – “all costs are costs” and they should be put on the cost side of the feasibility study, which is what I do and have always done.

When Can You Get Your Hands On The Sales Income.

Getting the sales income into your account is very important, yet many people never ask the question as to what the procedure is “exactly” in their neck of the woods.

Get to your Conveyance Expert and have them give you a schedule of events “with an estimate of time for each stage.”

This information is important in preparing your cash flow feasibility study format, as it results in reducing your interest cost.

So by knowing this information at the beginning of a development investigation, you are adding a little bit of “certainty” to the early stages of your feasibility study.

Let me give you an example:

At the end of the construction phase the builder moves off site, there are a whole range of things that have to occur, any or all of which can delay, settlement taking place and so delay you getting the Sales Income.

Some of these things are:

o Architect’s inspection of the entire project.

o Architect preparing a Defects List.

o Builder calling back subcontractors to correct defects.

o Architect’s final inspection.

o Architect issues Completion Certificate

o Surveyor (engineers in some countries) does final measurement of the individual residential accommodation units and compares to Unit Plan that is included in the Sales Contract.

o Preparation of the Final Unit Plan (as used by conveyance office) for settlement.

o Lodgment of the Unit Plan with the Titles Office.

o Registered Title Issued by the Titles Office.

Can you see that any delay in these items will impact on the settlement date and also on your interest calculation in your feasibility study?

Body Corporate / Management Plan

It is hard to keep up with all the different names that are used around the world for the Legal Entity that runs the complex of units you have developed, however your legal advisor will let you know.

Just as out Towns, Cities and States need Rules & Regulations for all its citizens to live in harmony, so too does a small complex of units, condos, apartment etc.

What ever it is called in your part of the world, is necessary for you to engage a legal advisor to prepare one for you, which will include the preparation of a Budget to which you, as the developer, will have to pay in a certain amount of money.

The reason I am giving this brief explanation on Body Corporate / Management Plans is because at Settlement you will get back some of the money you put in to get the Budget off the ground.

In addition you will have paid the Local Council, Utility etc other amounts of money that cover a set period of time. Once again you will get some of this money back at Settlement. They are generally referred to as “Adjustments at Settlement” and act as a reduction on the cost side of your feasibility study.

So What’s Next?

Remember I told you earlier about the Unit Plan that was lodged with the Titles Office, well has it issued yet? Phew – we just got it today – great!

Now your conveyance expert has to let the Buyers’ representative know in writing that you are ready to settle.

In addition the buyers have to let their individual Finance Lenders know to have the Mortgage Documents completed on time and finally a date has to be agreed on which all these differing parties can meet and settle.

Now I don’t want you to be concerned about all this stuff, but I do want you to know about it, so that you can understand and manage (yourself) and others who have to do all this work for you. Blowing your Top (blood pressure up) achieves nothing.

But understanding, on your part, achieves a great deal. Blowing your top, when you haven’t taken the trouble to find out, makes you look foolish and unprofessional, to the professionals you have engaged to do the work for you.

So Do I Get The Money Now Or Is There More Colm?

Well, the Lender Gets the money actually – yep, the lender gets his Capital Debt and Interest paid off first. And when there is no debt, all the rest is yours. That is, your equity is returned to your account and that lovely Profit, you worked so hard to get.

No matter what profession you are in, you will be impacted by real estate in some form or another. Whether you own, rent or sub-let, your life is impacted by real estate and the professionals or individuals that sell, manage or own it.

With that in mind, it would make sense that you just might be interested in people who have made it big in real estate. There are a select few in the entire world who have made their tremendous mark on the real estate landscape. Although, there were many struggles along the way, they arrived at that coveted spot of being a famous real estate tycoon.

Sarah Beeny is a developer and a host of Property Ladder, a British television program in the U.K. Beeny is a die-hard optimist and proponent for incorporating energy efficiency into building or remodeling.

Tim Blixseth is an American real estate mogul and billionaire businessman. He made a promise early on in his investment life to only collect assets, not liabilities, for the remainder of his life. He says he’s stuck to that promise.

Donald Bren, according to Forbes.com, is the wealthiest real estate tycoon on the planet with a $12 billion net worth. He currently owns hundreds of office buildings, along with 90 apartment complexes.

Conrad Hilton is the founder of Hilton Hotels. Hilton was known as a tremendous philanthropist who believed charity was a basic requirement for humanity.

Stanley Ho is one of the richest people in Asia. He’s a Macau and Hong Kong billionaire and casino mogul.

Lee Shau Kee is recently most famous for losing around $8 billion in net worth just in the past two years. Even with the huge losses, Kee continues to be noted as owner for Henderson Land Development. China’s greater region still considers Kee as one of the area’s richest people.

Ray Kroc is a entrepreneur who founded the McDonald’s Corporation franchise. Kroc purchased all rights to the McDonald’s name from the founding brothers Richard and Maurice McDonald. He took the franchise internationally to Japan and Germany in 1971.

Akira Mori is a famous Japanese tycoon and billionaire. He’s one of the richest men in the world. President and CEO of Mori Trust, his family’s company owns real estate and hotels in Tokyo and all over Japan.

Minoru Mori is also a famous Japanese real estate tycoon and billionaire. He and his brother Akira are sons to Taikichiro Mori.

Donald Trump is a famous television celebrity and billionaire developer. Although his investments fluctuate with the waves of the sea, he always seems to come out on top.

Steve Wynn is a well-known Las Vegas casino and resort developer who developed some of the most opulent casinos and resorts in the City of Las Vegas.

Sam Zell’s net worth exceeds $6 billion. He is ranked 68th on Forbes’ list of richest Americans. He co-founded Equity Group Investments LLC that launched Equity Residential and Equity Office Properties.

A ‘real estate investor’, who can be also called as ‘real estate developer’ is a business person who buys and sells properties like land and houses. He is the person between the seller and the buyer. In countries like United Kingdom, a real estate developer is also called a ‘real estate broker’. A real estate investor meets many financial and business choices everyday, like capital gains, tax credits and interest rates. For this he needs to have a deep knowledge on real estate investing, he should also be capable of understanding things and a hard worker. A real estate investor gets his knowledge only through years of experience in real estate investing; he also needs to have deep interest and dedicated. He should to be patient while dealing with his clients and ready to wake up at 2:00AM to speak over the phone!

A real estate investors or brokers frequently have sales people, who are also called as ‘agents’, who help and assist real estate investors in the process of selling properties and even carries out other legal activities, refers legal documents and supervise things. To work as a real estate investor, the investor needs a license as the money is been exchanged between parties and the broker needs to be in presence as the agents work. Real estate investors without license will not be allowed to work unless the property buyer is working with his real estate developer. In this case, there is no necessity of any paperwork. Initially you need to be accredited as a real estate investor to obtain a license which is followed by a mandatory ninety hour course and you have to pass the real estate law exam.

A real estate investor generally targets either residential real estate or the commercial real estate. But there are investors who can handle both. If you need to survive with commercial real estate investing, then you need to have gain lot of experience and knowledge through residential real estate investing. But in many cases the experience which you obtain in residential real estate won’t be enough! Investors dealing with commercial real estates must have enough capital and they need to learn more things as they handle rich business people who will be quite analytical and expect better things from you. Compared to residential, commercial real estate investing is known to be more rewarding and challenging.