In this module, we will discuss strategies developers employ to evaluate which projects to pursue. We'll consider what kinds of goals motivate various developers, and discuss the implications of those motivations on project choices. We’ll close with an exploration of different types of risk, showcasing how to bring together all of the concepts discussed in this module in an authentic scenario where we walk through a project evaluation exercise.

In this module, we will explore the importance of conducting due diligence to identify potential risks, liabilities, and obligations before purchasing a property or pursuing a project. We will also discuss strategies to mitigate risk, including analyzing comparative sales, researching market rent data, and developing detailed construction budgets. We’ll conclude by examining how to build a project’s capital stack to ensure that there are enough capital sources to cover all of a project’s intended uses.

In this module, we will delve into the financial benefits of real estate and begin to understand how to analyze a project’s financial performance. We will discuss how to approach a lender and how they evaluate real estate projects. We’ll also discuss the difference between using debt in your real estate project versus exclusively using equity, and the impacts of both on a project’s financial returns. We will close by explaining return metrics and the variables needed to calculate such metrics.

In this final module, we will explain how to interact with and evaluate a real estate financial modeling tool known as the “pro forma”. We will demonstrate how to input assumptions, market data, and other property information and then evaluate a project’s feasibility and financial performance. By walking through a case study, we will explore the various tabs in the pro forma and how such information functions together. We will close by performing a sensitivity analysis using the pro forma to examine the best, most likely, and worst-case scenarios for the real estate project modeled in the case study.