Ficha de revisão: Mastering Property Development Fundamentals

Property Development Revision Sheet

1. 📌 Essentials

• Property development involves stages: land acquisition, construction, occupancy, management, sale.
• Construction durations: Office (18-48 months), Retail (6-48 months), Multifamily (6-24 months), Industrial (9-12 months). Core development team includes architect, engineer, construction manager, broker, environmental consultant, legal, and financial professionals.
• Costs are divided into soft costs, hard costs, finance costs, contingencies, developer profit, and reserves.
• Due diligence covers title review, environmental, zoning, infrastructure, and habitat considerations.
• Entitlement process requires design, environmental, traffic, fiscal reports, and public approvals.
• Development regulations include zoning, FAR, height, parking, buffers, transfer rights, impact fees.
• Highest & best use criteria: physically possible, legally permissible, financially feasible, most productive.
• Financing options: construction loans, mini-perm, permanent loans, span loans, standby commitments.
• Creating a draw schedule involves precise timing, interest projection, lien releases, and lender approval.
• Major risks: cost overruns, market downturns, permit delays, poor workmanship, tenant issues.

2. 🧩 Key Structures & Components

• Land Parcel — the site where development occurs.
• Development Team — architects, engineers, contractors, consultants, financiers.
• Construction Phases — design, permitting, construction, inspection.
• Financial Instruments — construction loans, permanent loans, bridge loans.
• Entitlement Approvals — zone changes, general plan amendments, public hearings.
• Regulatory Constraints — zoning, FAR, height limits, parking requirements.
• Environmental & Due Diligence Reports — Phase I & II assessments, habitat studies.
• Highest & Best Use — optimal land use based on physical, legal, financial, and productivity criteria.

3. 🔬 Functions, Mechanisms & Relationships

• Sequential Flow: Land acquisition → Design & Entitlement → Construction → Management → Sale.
• Hierarchical Organization:

  Development Process
   ├─ Planning & Due Diligence
   ├─ Design & Entitlement
   ├─ Construction & Permitting
   └─ Sale & Management
  

• Relationship:
  • Development team coordinates design, permits, and construction.
  • Costs influence financing and project feasibility.
  • Regulatory constraints shape design options.
• Flow of Funds:
  • Draw schedule aligns payments with construction milestones.
  • Lender reviews and releases funds based on progress.
• Risk & Control:
  • Proper due diligence reduces legal/environmental risks.
  • Schedule and budget management mitigate delays and overruns.

4. Comparative Table

Item	Key Features	Notes / Differences
Construction Duration	Office: 18-48 mo, Retail: 6-48 mo, Multifamily: 6-24 mo, Industrial: 9-12 mo	Varies by property type
Development Costs	Soft: permits, design; Hard: materials, labor; Finance: interest; Contingencies, Profit, Reserves	Cost control critical
Financing Types	Construction loan (short-term), Mini-perm (moderate), Permanent (long-term), Span loans (construction to stabilization)	Different stages of funding
Entitlement Process	Design, environmental, traffic, fiscal reports, approvals, conditions	Secures legal permissions
Highest & Best Use	Physically possible, legally permissible, financially feasible, most productive	Guides land use decisions

5. 🗂️ Hierarchical Diagram

Property Development
 ├─ Land Acquisition
 ├─ Design & Entitlement
 │    ├─ Architectural Plans
 │    ├─ Environmental & Traffic Studies
 │    └─ Public Hearings & Approvals
 ├─ Construction
 │    ├─ Permitting
 │    ├─ Building Phase
 │    └─ Inspections
 ├─ Management & Sale
 └─ Market & Financial Analysis

6. ⚠️ High-Yield Pitfalls & Confusions

• Confusing soft costs with hard costs; soft costs include permits and design.
• Overlooking environmental assessments; Phase I & II are mandatory.
• Misunderstanding zoning constraints; FAR, height, parking are critical.
• Ignoring the importance of a detailed draw schedule; impacts cash flow.
• Underestimating risks: market downturns, cost overruns, permit delays.
• Assuming all projects are equally feasible without highest & best use analysis.
• Failing to verify lien releases before fund disbursement.
• Overlooking the impact of regulatory and environmental constraints on project scope.

7. ✅ Final Exam Checklist

• Understand the stages of property development from land acquisition to sale.
• Memorize typical construction durations for different property types.
• Identify key team members and their roles.
• Differentiate between soft costs, hard costs, and finance costs.
• Know the due diligence process: title, environmental, zoning.
• Describe the entitlement process and necessary approvals.
• Recognize development regulations: zoning, FAR, height, parking.
• Apply highest & best use criteria to evaluate land.
• Compare financing options: construction loans, mini-perm, permanent loans.
• Create and interpret a draw schedule; understand lien releases.
• Identify common risks: cost overruns, market risks, delays.
• Verify project progress through site visits and documentation.
• Understand regulatory compliance and environmental assessments.
• Recognize the importance of risk mitigation and proper planning.
• Be familiar with the hierarchical flow of development activities.
• Know the critical points for cost management and schedule control.

This revision sheet condenses core concepts for exam success in property development.