Description

In this episode, Shane walks us through a 10-unit townhouse development. He shares a back-of-the-envelope calculation to picture the cost, revenue, and value of this development.

[00:01 - 10:31] Investors Want a Clear Roadmap and Plan

Step 1. Costs

• Land
• Hard costs
• Soft costs>contingency

Step 2. Revenue

• Income/Expense>Net Operating Income (NOI)>Value

Step 3. Value

• Should be based on the cap rate
• The Cap rate is what the investors are prepared to pay
• There are other factors that could add to the cost, especially when there's a broker involved. 
• A few things:
• • Research where you can get the highest rent for the lowest land cost
  • New investors are usually hung up on soft costs
  • Contractors could help you determine the hard cost

If you want a copy of my two-page back-of-the-envelope calculation, head on to my Youtube channel at https://www.youtube.com/c/ShaneMelanson and comment BOE. I've prepared an entire spreadsheet ready to use.

[11:35 - 12:29] Closing Segment

If you are interested in my coaching and consulting program, please email me at  shane@shanemelanson.com. I want to make sure to cater to those interested, so please use the word "coaching" on the body or subject line.

You can also follow me on Linkedin and Twitter. If you want to go even deeper into the world of commercial real estate, head over to Shane Melanson, a roadmap to investing in commercial real estate! Get my book Club Syndication - How The Wealthy Invest Their Money.

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