Real Estate 101 10/9/2012 cy A Presentation by Idaho ‘APA Idaho Chapter Conference riday October 12, 2012 Bob | ie Presenters «Brian Ballard is a patnerin the aw ti of Havoy Tex “Matt Brookshiers present ofthe ookshier Group, development cexneung +Bruce Chatterton isthe Coneuniy Development Orecor forthe Cy of Wer «Robert Taunton isan associat we he Cane for Greater Good Presentation Topics ‘alegre approach ea estate development ‘Thar estate ce ‘Wat curent conetons mean forces and counties Factors that impact the development process ‘Wats wantod nthe dvelonment process > Bruce PRIVATE PROCESS PUBLIC PROCESS Cericate of Oscupancy i10/9/2012 Bwuce(Bvien Bun PRIVATE PROCESS = PUBLIC PROCESS Steps in the Development Process Sets tamework for 4 development Fstregdator step + Allow for review of ortain ses at may havelimpacs ‘on sounding uses Enables propery tobe bought and sod Ensues adequate publo ‘aces and bldable reas = ® im @ Conceptual Development iolth sagt [=] @ Project Cost Assumptions + Property 40 acres + Planning & Entitement Costs = $1,500/lot + Price ‘$40,000 per acre + Site Development Costs = $32,500/lot + Development Assumptions + Offsite Development Costs = $350,000 ~ Tar commer comer + Development Company Operating Expenses 1Shome 5 ule) ~ General Admin: $100,00 fst year, 6 ofreverus star 7 ~ Marketing: $75,000 first year, 1% of revenues after + Price Assumptions = Closing Costs: 5% on revenues: = Home rie» $28,000 ~ Lapl Cots: $75,00 spread arse projet ~ Lot Sales Price = 25% of home price ($62,500) ~ Taxes: $15,000 first year, 0.5% of revenues after10/9/2012 Mat EY ® Base Scenario Proforma ® ‘Analyzing Results Lin Thowsends “Internal Rates of Return (IRR) es eran et pons bank scent we — zfs = same v Font mene cos) nose eto sare aun (rt seer ee a af ee Cashin be same aunt cine mm x $1 ilon insted at 10% 5 yor wilt tho a invests money ps $100.00 per eer ao $1 5 millon a retuned the end 5 yas cr ‘The TOTAL RETURNS ote inet $1.5 lon (0%o0 hsher ate wa money BUTTS ONLY EQUIVALENT TOA 103 INTEREST RATE (saree [a [oor [| oe [eT] ‘Time's one ofthe tiggst factors impacting retuns. teat of Ron ie -UpFent Coss ao have iginpacs = | @ Impacts of Retums 8 ‘What is the “Right” Rate of Return? : + HIGHER RISK = HIGHER RR Required ee res > Roa Esa Developments he HIGHEST RISK inesiment ss “Seemann - ravenna peat Deny fon 3 > run Nk Bayt US Gomme + inreae Ofste Cots om $350 0001 $7000) + Home Mortgage Rates ~€% at) + Development ot Raw Land Requires 155+ + Inerease Site Development Cots by 10% > The cerence between 15% and 3.25% fs RISK Nn R= 12708 FAILED) >> Each developer wl require adferentetun depending on he + Rote Find Home Poesy 10% fk assocate wih pict = Naw R= 2% FALED) + Because prices and costs can't be controled - reducing risks + Ast YearfEnoment (No Ber Enter’ Cast) the focus of developers = Na RR= 11496 FLED) Bvian =f a Overall Risks a Such a Risky Business Requires. oe = | @e6eo