Sprint #2: Establish Realistic Pro Forma Inputs
Zoom Session 2A
How much rent can you generate? Finding people and creating a building program. The purpose of this session is to define a building program that generates enough rent to proceed with with useful income numbers. Since you can't do the project without the rent, we need to be creative about how to generate that rent in a way that works for both local tenants and the developer. In this session, we review examples of building programs and tenant curation strategies. When dealing with residential rentals, we talk about how to design more rent into your building.
Structuring your organization and deal This session covers typical legal and deal structures for a small-scale developer with a neighborhood focus. How do you protect yourself, your partners, and your real estate? How can you be prepared for success or failure, legally and structurally? What are the circumstances in which you might work with a bank vs. an investor? What should you expect from those relationships?
How are you going to pay for your building? Where is the money in your town? Who can you talk to and how should you talk to them? How much equity are you going to need for a bank to be comfortable issuing you a mortgage? This session will help developers get into the mindset of a lender or investor so they can be realistic with their numbers going forward.
Q&A There will be generous Q&A and local discussion time provided to share local insight on rents, sources of capital, and deal structures. Faculty will facilitate discussion to brainstorm tenant ideas and provide general feedback on building programs.
Session 2B
Refresher: Creating a Basic Static Pro Forma Faculty will record a tutorial on how to build and analyze a basic pro forma so that participants can quickly test out their numbers on different building programs. This session will be recorded so that participants can review it at whatever pace or repetition that makes it click.
Sprint Homework:
- Draft building program(s) that generate sufficient rent
- Identify your target audience (ideal tenants) and their rent capacity
- Do a SWOT analysis on your building program. How is it risky and how can you mitigate or price that risk appropriately?
- Diagram your connections to different investors and lenders in your town. Make a pro/con list for your most viable sources of financing.