Essentials of the Development Process On-demand

Essentials of the Development Process

This survey course will examine the seven stages of a comprehensive real estate development model at an introductory level. This model begins with raw land in the land banking stage and continues through land packaging, land development, building development, and building operations. The model continues through the development process to include building renovations and property redevelopment. The life cycle of a real estate development is analyzed in terms of how value is created in each stage of development. Module One presents the theoretical context of this seven stage model, then starting with Module Two, successive sessions will examine each principle development stage by outlining how value is created, key players, critical tasks, controllable costs and major risks. Examples discussed in each stage will describe how to apply those principles to real world practices. Finally, a special skills section will be presented at the end of each module. These special skills will teach students how to perform basic calculations to estimate and analyze real estate values in order to better understand value creation throughout the real estate development process.

About On-demand Courses

This is an edited version of a previously recorded, live, online course. Student and instructor comments are the opinions of the individuals and do not necessarily reflect the views of NAIOP.

All handouts and resource materials are posted with the module to which they belong, as well as an evaluation and assessment at the end of the course.

To receive proof of attendance for this course, each student must attend/view all eight modules and complete the evaluation.

As a NAIOP Certificate candidate, you must complete all eight modules in the Basic Real Estate Finance On-demand course, submit the evaluation, and pass the end-of-course assessment with a score of 80 percent or better.

If you experience any difficulty with accessing this on demand course or its materials, please email education@naiop.org or call 703-904-7100, 8:30 a.m.–5:30 p.m. (ET), Monday–Friday. You can also view the FAQ here.

Lesson Plans

Module 1

Overview of the Real Estate Development Process

During this session, students will discuss what real estate developers are and what real estate developers do from several points of view. Students will also review various perspectives of real estate development from the writings of James A. Graaskamp. The discussion then moves to the seven-stage real estate development process using a schematic diagram, a box diagram and a venn diagram. The seven stage model is combined with the eight required tasks for each stage to define the real estate “Development Matrix.” This 56-cell matrix is analyzed to demonstrate how real estate developers and real estate professionals interact throughout the life cycle of a real estate project. The students will expand this two-dimensional model to include property types and thereby define a three-dimensional real estate “Development Cube.” At the end of this module, students will have a working knowledge of the development matrix.

Module 2

Land Banking

This session explores Land Banking, the first stage in the real estate development process, in terms of how value is created. Students will review the critical tasks, major risks, key players and controllable costs of this stage. Students will learn to identify land bankers and understand the role of land banking in its relation to other stages. Students will learn to understand the varied nuances of the term “value” in real estate and the difference between market and investment value. This module also demonstrates the three variable Direct Capitalization Model and compares it to the more complex Discounted Cash Flow Model. This course will utilize the Direct Capitalization Models to calculate and compare values throughout the real estate development process.

Module 3

Land Packaging

This session explores the second stage of the real estate development process, Land Packaging. Students will review the critical tasks, major risks, key players and controllable costs of this stage. Students will identify the steps in the land packaging process and recognize the important roles of the numerous stakeholders required in this stage. Students will learn to calculate stabilized Net Operating Income (NOI) using gross income, vacancy and collections, and operating expenses. Students will also learn to estimate overall capitalization rates and understand the difference between market and investor’s rates. Estimating property value using the direct capitalization model will also be covered in this module.

Module 4

Land Development

This session explores the Land Development stage. We will review the critical tasks, major risks, key players and controllable costs of this stage. Students will learn how value is created through constructing infrastructure needed for future building development. In order to better understand the relationship between land developers and building developers, students will learn to estimate building development costs. The special skills section will continue with a review of how to calculate land value, using those cost estimates.

Module 5

Building Development

This session explores the Building Development stage. We will review the critical tasks, major risks, key players and controllable costs of this stage. The special skills section will focus on project feasibility by reviewing four components: 1) return on total costs compared to overall market capitalization rate 2) required spread as a measure of riskiness 3) the four step process to estimate a building developer’s justified land price 4) reviewing overall project feasibility with pessimistic, most likely and optimistic outcome predictions.

Module 6

Building Operations

This session explores the Building Operations stage. We will review the critical tasks, major risks, key players and controllable costs of this stage. The special skills section will instruct students how to estimate property value using a mortgage-equity analysis. This will be broken into four parts. First, understanding how an underwriter may analyze a property’s value using debt-coverage ratio, land to value ratio and borrower’s character. Second, how to estimate mortgage value in terms of annual debt payment and mortgage constant. Third, to estimate the equity value with the after financing cash flow and equity dividend rate. Finally, this session will conclude with estimating returns after financing.

Module 7

Building Renovation

This session explores the Building Renovation stage. We will review the critical tasks, major risks, key players and controllable costs of this stage. Students will learn how renovation of a property may increase the value to better optimize the existing use. In order to better understand how this value is created, the special skills section will focus on estimating the building renovation costs and the coinciding property value after renovation. After a review of those components, we will then discuss how to determine if a renovation project is feasible using overall net disposition cap rate analysis.

Module 8

Property Redevelopment

This session explores the Property Redevelopment stage. We will review the critical tasks, major risks, key players and controllable costs of this stage. This is the eighth stage of the real estate development process and completes the development cycle. To complement this stage, the special skills section focuses on the hold versus sell decision. This analysis uses the marginal rate of return and reinvestment rates, first examining how to estimate each, and then the comparison between the two in order to make the decision.

Education Credits

Education Credits

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Essentials of the Development Process is approved for the following Education Credit:
16 hours credit toward either the Certificate of Advanced Study in Commercial Real Estate Development or the Certificate of Advanced Study in Real Estate Finance.

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16 AIA/CES Learning Units
16 Professional Development Hours (PDH)
1.6 Continuing Education Units (CEUs)

Learning Objectives

Learning Objectives

By the end of this course, students will be able to:

  • Define the seven stages of the real estate development process in terms of:
    - How value is created,
    - Key players,
    - Critical Tasks,
    - Controllable costs,
    - Major Risks.
  • Analyze one example of each stage.
  • Estimate overall property value, land value, mortgage value, and equity value using direct capitalization methodology.
  • Understand the relationships among value, income, and capitalization rates.

Tuition & Register

Tuition & Register

Payment for a NAIOP online course entitles access for one person only to the course and all materials.

Course Tuition

  • Member: $795
  • Nonmember: $995
  • Developing Leader: $595
  • Student Member: $95
  • Student Nonmember: $145

How to Register

Confirmation

All registrations processed online receive an automatic confirmation. If you register via fax, mail or phone, the confirmation emails will be sent to you after your payment is received and processed. If you do not receive the confirmation emails within two weeks, please contact NAIOP at (703) 904-7100 to verify enrollment.

Login instructions to access the on-demand course are sent under separate cover from customercare@gototraining.com within 2 days. If you do not receive the login instructions, please check your spam folder. If the login email is still not there, please contact the NAIOP Education Department at education@naiop.org.

Cancellation Policy

No refunds will be issued.

FAQs

FAQs

Are the course materials accessed through the NAIOP website?

No. The only way to access the course materials is through the login email you will receive once payment is processed. The course materials are hosted on the GoToTraining website.

Can I access and view the recordings and materials on an iPad, iPhone, iPod or other iOS device?

At this time, no. Once that is available, all students will be notified of the improved functionality. We recommend accessing recordings on a desktop computer until that time.

Can I repeat a module?

Yes. You may repeat any module as many times as you’d like during the 3 months you have access to the course materials.

Can I retake the assessment/test?

Yes. Students can take the assessment/test up to 3 times. Please contact education@naiop.org to schedule a re-test.

Can I share this on-demand course with anyone else?

No. Payment for a NAIOP On-demand course entitles access for one person only to the course and all materials.

Do I have to view the modules in order?

No. You can take view the modules in any order you choose; however, depending on the course, some modules might build upon the one previous to it.

Do on-demand courses count towards the Certificate Programs?

Yes, all 16-hour on-demand courses count towards the Certificate Programs. NAIOP Certificate candidates must also take the assessment/test for each course and pass it with a score of 80% or better. Please review the Certificate Programs webpage to see what courses count towards each Certificate.

I’m having problems accessing the on-demand course.

If you experience any difficulty with accessing an on demand course or its materials, please email education@naiop.org or call 703-904-7100 between 8:30 a.m. and 5:30 p.m. Eastern time, Monday-Friday.

How do I access the course materials?

The only way to access the course materials is through the login email you will receive once payment is processed. To view, click on the “review the materials” link in your confirmation email. We recommend that you bookmark this page in your browser for easy future access.

How do I ask a question?

Please send any question you have regarding content to education@naiop.org. We will forward it to an instructor for a response. Please allow up to a week for a response.

How do I receive my proof of attendance upon completion of the on-demand course?

Email education@naiop.org once you have attended/viewed all nine modules, and completed the evaluation and passed the assessment/test (where applicable) to receive your transcript as proof of completion. Please allow 30 days to receive your transcript.

How long do I have to complete the on-demand course?

You will have access to all handouts and resource materials for 3 months from your enrollment date.

Is there a required live component to the on-demand courses?

No. Students are not required to attend any live sessions. The system will require you to enter your First Name, Last Name and email address when viewing module recordings. We will track your attendance this way. Students can ignore the “Join” button and class dates that will appear in the confirmation email.

What is required to receive credit/proof of attendance for an on-demand course?

Students must attend/view all recorded modules in an on-demand course and complete the evaluation. NAIOP Certificate candidates must also take the assessment/test and pass it with a score of 80% or better.

What program do I need in order to view the recordings?

A: At this time, the recordings are .WMV files and are accessed through Microsoft Windows Media Player. If your system doesn’t have Windows Media Player, or it is out of date, please download it directly from Microsoft. Videos are also viewable using the VLC Media Player, which is downloadable at http://www.videolan.org/vlc/index.html.

Links: links to third party pages are provided for convenience only. We do not express any opinion on the content of any third party pages and expressly disclaim any liability for all third party information and the use of it.

Will I have instant access to all course materials upon registration?

Yes. Assuming you register via the NAIOP website, you will receive an email with login instructions within minutes of the payment being processed online. If you register via fax or check, it can take up to three (3) business days from receipt of payment for you to receive your login instructions. Please note, check payments can take up to 2 weeks to process through the bank. Online registration is the preferred and fastest method.