Debt and Equity in Real Estate Development
If you're thinking about getting into real estate development, you'll need to know the proper metrics by which to gauge the industry. One of these is stress tests, and it's an area in which any up-and-coming or long-standing member of the real estate development community will want will want a firm degree of competence.
How should real estate developers and investors conceptualize debt and equity in the industry? In this video, Scott Choppin, Urban Pacific Founder and CEO explains.
Fundamentally, the way that we finance real estate projects really is the same no matter which product type you develop. So you could do office. You could do residential. You could do, you know, retail hotels. Right. And so generally the way I think about at a high level is you're really always going to have a mix of debt and equity. And, you know, maybe a standard rule of thumb might be. Seventy five percent debt. Twenty five percent equity. That would be of the cost. So if it's a 100 million dollar project. Seventy five percent would come from a lender. Twenty five percent would come from investors. You know, call that equity.
Thanks for watching today's video where we went over 3 stress tests for a real estate development model! If you enjoyed today's video, be sure to leave a like rating and a comment, and also be sure to subscribe to the Urban Pacific Group of Companies YouTube channel for more videos like you just watched!
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