Chapter 2 Organizing For Development

Organization of the Firm -Two extremes - Many services under one roof (architects, construction managers, engineers, property managers, etc. (Big guys) -One guy does what he can and hires consultants to do the rest. (Little guys)

Selecting consultants -Best available fit, not just cheapest fee -Level of specific experience -Locals -References, ASK other developers

Partnerships? Not to be confused with the LP’ s covered later -Development partners should have complementary not similar skills. -Each party should play a role commensurate with not only the work performed but the amount of risk undertaken as well. -Compensation should follow these same considerations.

Development Organization Life Cycles -Startup: Successfully complete first project(s) and sufficiently pay the internal bills (overhead, wages, boat payment, etc.) -Growth: Continue to do the tasks necessary in the startup stage, but do them more efficiently. -Maturity: Deals come to you, equity and debt are readily at hand. Successful track record alleviates need to take on excessive risk.

Other considerations -Compensation -Strategic and tactical planning -Mission Statement -Ability to grow -Image (business and personal)

Consultants -Locating -Selecting -Paying -Working with consultants

Construction-related consultants Land Planners - Surveyors Engineers Geotechs Architects Contractors

Service-related consultants Market consultants Appraisers Attorneys Title Companies Surety Brokers Property Managers

Financing Lenders - Commercial banks - Insurance companies - Pension funds Investors - Private - Equity firms (also private)

Financing continued… Mezzanine Debt Construction Lenders Permanent Lenders Mortgage Brokers