Your First Development Project
Bring it all together and execute a complete development from land to permits
The $3 Million Development:
Two developers walk past the same vacant 2-acre lot in a growing suburb. Developer A sees “just another empty lot” and keeps driving. Developer B stops, runs a complete site analysis using everything from Module 2, identifies R-3 zoning allowing 24 townhomes, discovers the city desperately needs workforce housing, navigates the approval process like a pro, and creates $3 million in value where others saw dirt. The difference? A complete understanding of land development from site selection through permit approval. Today, you become Developer B.
1. The Professional Development Framework
A complete development project combines every skill you’ve learned in Module 2. Here’s the step-by-step framework that professional developers use:
🎯 The 10-Phase Development Process
Market Opportunity Identification
Purpose: Identify underserved markets and development opportunities before others
✅ Opportunity Analysis Checklist:
Demographic Analysis: Population growth, income levels, age distribution
Supply/Demand Gap: What housing types are undersupplied?
Employment Centers: Where are people working? Commute patterns?
Infrastructure Plans: New roads, transit, utilities coming?
Competition Analysis: What are other developers building?
🔍 Key Metrics to Track:
- Absorption rate for different product types
- Price per square foot trends by area
- Days on market for new construction
- Permit activity and development pipeline
Site Selection & Analysis
Purpose: Find and evaluate potential development sites using professional criteria
📍 Site Evaluation Matrix:
Physical Characteristics
Topography: Slope analysis, grading requirements
Soils: Geotechnical suitability, drainage
Environmental: Wetlands, protected species, contamination
Utilities: Availability and capacity
Regulatory Factors
Zoning: Current use, density allowed
Future Land Use: Comprehensive plan designation
Overlays: Historic, environmental, airport
Development Standards: Setbacks, height, coverage
Economic Viability
Acquisition Cost: Price per buildable unit
Development Costs: Site work, infrastructure
Market Pricing: Achievable sales/rents
Return Metrics: IRR, profit margin
📊 Professional Site Scoring System:
Location (30%): Proximity to employment, schools, amenities
Physical (25%): Topography, shape, access
Regulatory (25%): Zoning, entitlement difficulty
Economic (20%): Acquisition cost, development feasibility
Feasibility Study & Pro Forma
Purpose: Determine if the project makes financial sense before proceeding
💰 Complete Feasibility Analysis:
Market Study
Comparable Projects: Recent developments, absorption rates
Pricing Analysis: Per square foot, per unit pricing
Target Market: Buyer profiles, income requirements
Absorption Projection: Sales pace, market depth
Development Program
Unit Mix: Types, sizes, bedroom counts
Density Calculation: Units per acre, FAR
Amenity Package: Community features, unit features
Parking Requirements: Ratios, garage vs surface
Financial Pro Forma
Revenue Projection: Unit sales, price escalation
Development Costs: Land, hard costs, soft costs
Financing Structure: Equity, construction loan, terms
Return Analysis: IRR, equity multiple, profit margin
🚦 Go/No-Go Decision Criteria:
- Minimum IRR: 18-25% (market dependent)
- Profit Margin: 15-20% on costs
- Equity Multiple: 1.5x minimum
- Risk-Adjusted Return: Appropriate for project complexity
Land Acquisition Strategy
Purpose: Secure the site with appropriate protections and contingencies
📑 Acquisition Structure Options:
🛡️ Essential Contingencies:
- Feasibility Period: 60-90 days for all studies
- Financing Contingency: Securing construction loan
- Entitlement Contingency: Obtaining necessary approvals
- Environmental Clean: Phase I and II if needed
- Title and Survey: Clear title, accurate boundaries
Due Diligence Investigation
Purpose: Uncover all issues before committing to purchase
🔍 Professional Due Diligence Checklist:
Physical Investigations
- ALTA/ACSM survey with topography
- Geotechnical investigation and report
- Phase I Environmental (Phase II if needed)
- Utility capacity letters
- Traffic impact analysis
Legal & Regulatory
- Title report and commitment
- Zoning verification letter
- Development agreement review
- CC&R and deed restriction analysis
- Easement and encroachment review
Economic Validation
- Updated market study
- Construction cost estimates
- Financing term sheets
- Pre-sales interest testing
- Municipality fee schedules
📊 Due Diligence Decision Tree:
Green Light: All clear, proceed to closing
Renegotiate: Issues found, adjust price/terms
Kill Deal: Fatal flaws discovered, walk away
Conceptual Site Planning
Purpose: Create optimal site layout balancing market, regulations, and economics
🏗️ Professional Site Planning Process:
Bubble Diagram Phase
Rough layout of uses, circulation, relationships
Schematic Design
Refined layout with dimensions, unit counts
Preliminary Engineering
Grading, utilities, stormwater concepts
Design Development
Detailed plans for submission
⚡ Design Optimization Factors:
Density Maximization
Units per acre within zoning limits
Efficient unit layouts and clustering
Cost Efficiency
Minimize earthwork and retaining walls
Efficient utility runs and road layouts
Market Appeal
Privacy, views, amenity access
Curb appeal and community feel
Regulatory Compliance
Setbacks, buffers, open space
Parking ratios, accessibility
Development Team Assembly
Purpose: Build the professional team needed for successful execution
👥 Essential Development Team Members:
Land Use Attorney
Role: Entitlements, agreements, closings
Selection: Local experience, municipality relationships
Civil Engineer
Role: Site design, infrastructure, permits
Selection: Municipality approved, similar projects
Architect
Role: Building design, product differentiation
Selection: Style fit, cost consciousness
General Contractor
Role: Construction execution, cost control
Selection: Track record, bonding capacity
Marketing Team
Role: Branding, sales, market positioning
Selection: Local market knowledge, proven results
📄 Key Team Agreements:
- Fee Structure: Fixed fee vs percentage vs hourly
- Performance Standards: Timelines, quality metrics
- Liability Allocation: Insurance requirements, indemnities
- Change Order Process: Approval levels, documentation
Entitlement Process Navigation
Purpose: Secure all necessary approvals to build your project
🏛️ Typical Entitlement Process:
1. Pre-Application Meeting
Present concept, get staff feedback
Identify major issues early
2. Neighborhood Engagement
Community meetings, address concerns
Build support, minimize opposition
3. Formal Application
Submit plans, studies, fees
Enter review process
4. Staff Review Cycles
Address comments, revise plans
Negotiate conditions
5. Public Hearings
Planning Commission presentation
City Council final approval
🎯 Approval Success Strategies:
- Early Engagement: Meet with staff before applying
- Political Awareness: Understand decision-maker priorities
- Community Benefits: Offer meaningful project amenities
- Professional Presentation: High-quality visuals and materials
- Flexible Negotiation: Know where you can compromise
Permit Processing & Final Design
Purpose: Convert entitlements into buildable construction documents
📋 Development Permit Sequence:
Site Development Permits
Grading Permit: Earthwork and erosion control
ROW Permit: Street and utility work
Stormwater Permit: Drainage and quality systems
Utility Permits
Water/Sewer: Connection and extension permits
Power/Gas: Service coordination
Telecom: Conduit and service planning
Building Permits
Foundation: Can often pull early
Vertical Construction: Full building permit
Trade Permits: Electrical, plumbing, mechanical
📐 Construction Document Package:
- Civil Plans: Grading, utilities, roads, drainage
- Architectural Plans: Floor plans, elevations, details
- Structural Plans: Foundations, framing, connections
- MEP Plans: Mechanical, electrical, plumbing systems
- Landscape Plans: Planting, irrigation, hardscape
Construction Financing & Launch
Purpose: Secure funding and begin construction
💰 Typical Development Financing:
Equity (25-35%)
Developer Equity: 5-10% minimum
Investor Equity: 15-25% typical
Structure: LP/GP or LLC
Construction Loan (65-75%)
Rate: Prime + 1-3%
Term: 12-24 months interest only
Requirements: Pre-sales, completion guarantee
🚀 Construction Launch Checklist:
- ✅ All permits in hand
- ✅ Construction loan closed
- ✅ GC contract executed
- ✅ Insurance policies active
- ✅ Sales center ready
- ✅ Marketing campaign launched
- ✅ Project schedule finalized
2. Complete Development Project Analysis
Analyze a real development opportunity using the complete 10-phase framework:
🏗️ Professional Development Analysis: Creekside Commons
Development Opportunity:
Location: 2750 Creek View Drive, Austin, TX
Site Size: 5.2 acres
Current Use: Vacant land (former nursery)
Asking Price: $1,950,000 ($375,000/acre)
Zoning: MF-3 (Medium Density Residential)
Development Program:
Allowed Density: 36 units/acre (187 units max)
Proposed Project: 156 garden-style apartments
Unit Mix: 60 one-bedroom, 72 two-bedroom, 24 three-bedroom
Parking: 234 spaces (1.5/unit)
Amenities: Pool, fitness, business center, dog park
Phase 1: Market Opportunity
Austin Multifamily Market:
Population Growth: +2.8% annually (double national average)
Job Growth: +3.2% annually (tech sector driving)
Median Income: $78,500 (supports $1,950/mo rent)
Vacancy Rate: 4.8% (healthy, tightening)
Rent Growth: +5.6% YoY
Demand Drivers:
Major Employers: Samsung (3 mi), Apple (5 mi), Tesla (8 mi)
Demographics: 65% millennials, 78% renters by choice
Supply Constraint: Limited land, high construction costs
Market Depth: 2,500 new units absorbed annually
Competition Analysis:
Class A Properties: $2.15-2.45/sq ft (our target: $2.00)
Occupancy: 94-97% in submarket
Concessions: Minimal (1 month free on 13-month lease)
Market Assessment: Exceptional fundamentals support development
Phase 2: Site Analysis
Physical Site Characteristics:
Topography: ✅ Gentle 2-4% slope (ideal for development)
Soils: ✅ Well-draining sandy loam (good bearing capacity)
Environmental: ✅ Phase I clear, no wetlands/endangered species
Utilities: ✅ All available at property line with capacity
Access: ✅ Two points of entry possible from Creek View Drive
Drainage: ⚠️ In 500-year floodplain (requires elevation)
Regulatory Analysis:
Zoning: MF-3 allows up to 36 units/acre by right
Height Limit: 60 feet (5 stories possible)
Setbacks: 25′ front, 15′ side, 20′ rear
Lot Coverage: 60% maximum impervious cover
Parking: 1.5 spaces/unit required
Open Space: 200 sq ft/unit required
Site Scoring:
Location Score: 28/30 (near employment, great access)
Physical Score: 22/25 (flood plain deduction)
Regulatory Score: 24/25 (by-right development)
Economic Score: 17/20 (land cost slightly high)
Total Score: 91/100 (Excellent site)
Phase 3: Financial Feasibility
Optimized Development Program:
1BR (700 sf): 60 units @ $1,595/mo = $95,700/mo
2BR (1,000 sf): 72 units @ $2,195/mo = $158,040/mo
3BR (1,300 sf): 24 units @ $2,895/mo = $69,480/mo
Total: 156 units, 143,200 sf rentable
Monthly Rent Roll: $323,220 ($3,878,640 annual)
Development Cost Breakdown:
Land Cost: $1,950,000
Site Development: $2,340,000 ($15,000/unit)
Building Construction: $18,720,000 ($120,000/unit)
Soft Costs (20%): $4,602,000
Financing Costs: $1,388,000
Developer Fee (4%): $1,160,000
Total Development Cost: $30,160,000 ($193,333/unit)
Investment Returns:
Stabilized NOI: $2,327,184 (60% margin)
Development Yield: 7.72%
Market Cap Rate: 5.25%
Stabilized Value: $44,327,000
Development Profit: $14,167,000
Equity Multiple: 2.89x
Development IRR: 31.2%
Phase 4: Acquisition Strategy
Recommended Acquisition Structure:
Structure Type: Option Agreement with Entitlement Contingency
Option Period: 12 months (6-month extension available)
Option Payment: $50,000 (credited to purchase price)
Extension Payment: $25,000 for additional 6 months
Purchase Price: $1,950,000 (no financing contingency)
Key Option Terms:
Due Diligence Period: 90 days (all studies permitted)
Entitlement Condition: Site plan approval required
Early Termination: Any time with 30 days notice
Assignment Rights: Freely assignable to affiliates
Access Rights: Full access for studies and marketing
Risk Mitigation:
- Option structure limits exposure to $50,000 until entitled
- 12-month period sufficient for entitlement process
- Extension option provides buffer for delays
- No obligation to close without approved site plan
Phase 5: Due Diligence Results
Due Diligence Findings Summary:
✅ Survey & Title
Clean title, accurate boundaries, utility easements acceptable
✅ Geotechnical
Suitable soils, bearing capacity 3,000 PSF, no rock
✅ Environmental
Phase I clear, no recognized environmental conditions
⚠️ Drainage
500-year floodplain requires 2′ fill ($180,000 added cost)
✅ Traffic
Level of Service B, no off-site improvements required
✅ Utilities
All available with capacity, $195,000 tap fees
Financial Impact of Findings:
Additional Costs Discovered:
- Floodplain mitigation: $180,000
- Utility tap fees: $195,000 (higher than estimated)
- Tree mitigation: $45,000
- Total additions: $420,000
Revised Development Cost: $30,580,000
Revised IRR: 28.7% (still exceeds 25% hurdle)
Phase 6: Site Planning
Optimized Site Plan:
Building Configuration: 4 buildings, 3-story walk-up
Density Achieved: 30 units/acre (156 units on 5.2 acres)
Parking Layout: Surface parking, 234 spaces
Open Space: 35,000 SF (225 SF/unit, exceeds requirement)
Amenity Location: Central clubhouse with pool courtyard
Value Engineering Decisions:
Walk-up vs Elevator: Save $2M with 3-story walk-up
Surface Parking: Save $15k/space vs structured
Building Separation: Minimize fire-rating requirements
Efficient Units: 85% efficiency ratio achieved
Standard Finishes: Quality but not luxury
Entitlement Strategy:
- Administrative site plan approval (no variances needed)
- 4-month approval timeline expected
- Neighborhood meeting scheduled Month 2
- Staff supportive of workforce housing
Phase 7: Development Team
Selected Development Team:
Land Use Attorney
Firm: Drenner Group
Experience: 500+ multifamily projects in Austin
Fee: $75,000 fixed through CO
Civil Engineer
Firm: Civilitude Engineers
Experience: City preferred engineer
Fee: $185,000 (6% of site costs)
Architect
Firm: STG Design
Experience: Garden-style specialist
Fee: $468,000 ($3,000/unit)
General Contractor
Firm: Milestone Construction
Experience: 5,000+ units completed
Fee: GMP contract, 5% fee
Team Coordination Plan:
- Weekly OAC meetings during design
- Integrated project delivery approach
- BIM coordination for clash detection
- Shared project management platform
Phase 8: Entitlement Process
Entitlement Timeline:
Month 1: Pre-application meeting ✅
Month 2: Neighborhood meeting (45 attendees, minor concerns addressed)
Month 3: Site plan submittal
Month 4: First review comments (23 items)
Month 5: Resubmittal with responses
Month 6: Final comments (3 items)
Month 7: Administrative approval received ✅
Approval Conditions:
- Traffic mitigation fee: $156,000
- Parkland dedication: $312,000
- 15% affordable units at 80% MFI
- Enhanced landscaping along Creek View Drive
- Sidewalk improvements: $85,000
Stakeholder Management:
Neighborhood: Addressed traffic and school capacity concerns
Council Member: Supportive with affordable component
Staff: Excellent working relationship maintained
Phase 9: Permit Processing
Construction Permit Schedule:
Month 8: Submit building permit application
Month 9: Plan review comments received
Month 10: Resubmit with revisions
Month 11: Building permit issued ✅
Month 11: Site development permit issued ✅
Month 12: Notice to proceed construction
Permit & Impact Fees:
Building Permits: $124,800
Site Development: $46,800
Water/Wastewater Taps: $195,000
Electrical Service: $78,000
Traffic Mitigation: $156,000
Parkland Dedication: $312,000
Total Fees: $912,600
Phase 10: Financing & Construction Launch
Final Capital Structure:
Developer Equity (10%): $3,058,000
LP Investor Equity (20%): $6,116,000
Construction Loan (70%): $21,406,000
Total Capital: $30,580,000
Construction Loan Terms:
Lender: Texas Capital Bank
Rate: SOFR + 2.75% (currently 7.85%)
Term: 24 months, one 6-month extension
Recourse: 25% completion guarantee
Presales: None required
Construction Launch Status:
✅ All permits secured
✅ Construction loan closed
✅ GMP contract executed ($21,060,000)
✅ Builder’s risk insurance bound
✅ Marketing campaign launched
✅ Groundbreaking scheduled
Construction Start: Month 13
First Units Deliver: Month 21
Project Completion: Month 28
📊 Development Summary Dashboard
Project Metrics
Total Units: 156
Density: 30 units/acre
Dev Cost: $30.58M
Cost/Unit: $196,026
Financial Returns
Dev Yield: 7.72%
Profit: $14.17M
IRR: 28.7%
Equity Multiple: 2.89x
Timeline
Entitlement: 7 months
Permits: 4 months
Construction: 16 months
Total: 28 months
Risk Profile
Market Risk: Low
Entitlement: Complete
Construction: Moderate
Overall: Acceptable
3. Professional Development Package Presentation
A complete development package is essential for securing partners, lenders, and approvals. Here’s what professionals include:
📊 Professional Development Package Components
Executive Summary (2-3 pages)
Key Elements:
Investment Overview
Project vision, location, scale, unique value proposition
Financial Highlights
Total cost, equity required, projected returns, key metrics
Development Team
Developer track record, key team member bios
Investment Thesis
Why this project, why now, why this team
Market Analysis (8-10 pages)
Comprehensive Market Study:
Economic Overview
MSA economics, employment, demographics, growth projections
Supply/Demand Analysis
Historical absorption, current pipeline, demand projections
Competitive Analysis
Comparable properties, pricing, occupancy, amenities
Target Market Profile
Renter demographics, preferences, affordability analysis
Site & Development Plan (10-12 pages)
Physical Development Details:
Site Analysis
Location maps, aerials, site characteristics, opportunities
Conceptual Site Plan
Colored site plan, building locations, circulation, amenities
Architectural Renderings
Exterior perspectives, unit plans, amenity spaces
Development Program
Unit mix, square footages, parking, amenity list
Financial Analysis (12-15 pages)
Detailed Financial Projections:
Development Budget
Land, hard costs, soft costs, financing, detailed line items
Operating Pro Forma
10-year projections, revenue, expenses, NOI
Return Analysis
IRR, equity multiple, cash-on-cash, sensitivity analysis
Exit Strategy
Hold/sell analysis, reversion assumptions, waterfall
Implementation Plan (5-6 pages)
Execution Roadmap:
Development Schedule
Gantt chart, critical milestones, risk factors
Entitlement Strategy
Approval process, timeline, political considerations
Construction Plan
Phasing, delivery strategy, quality control
Marketing & Leasing
Pre-leasing timeline, marketing budget, stabilization
🏆 Module 2 Capstone Project
Complete Professional Development Analysis (35 minutes):
Demonstrate everything you’ve learned by analyzing this real development opportunity:
🏗️ Your Capstone Challenge: Vista Ridge Development
Site Information:
Location: 4500 Vista Ridge Parkway, Denver, CO
Size: 7.8 acres
Current Use: Vacant (former big box retail site)
Asking Price: $3,900,000 ($500,000/acre)
Zoning: C-MX-8 (Mixed-use, 8 stories)
Market Context:
Submarket: Tech Center/DTC area
Demographics: High income ($95k median)
Vacancy: 5.2% multifamily
Rent Growth: 4.8% annually
New Supply: Limited due to land constraints
Development Potential:
Allowed Density: No unit cap, 8 stories max
Proposed: 312 units (40 units/acre)
Mix: Studios to 3BR targeting young professionals
Parking: 1.25/unit structured (390 spaces)
Ground Floor: 15,000 SF retail opportunity
Key Considerations:
Environmental: Former gas station on corner (remediated)
Access: Needs traffic signal ($400k contribution)
Height: Neighborhood concerns about 8 stories
Timing: 18-month entitlement process typical
Competition: Two projects delivering in 12 months
Complete Analysis Requirements:
1. Market Opportunity (10 points)
- Assess Denver market fundamentals
- Analyze Tech Center submarket dynamics
- Evaluate competitive pipeline impact
- Define target market and pricing
2. Site Analysis (10 points)
- Evaluate physical site characteristics
- Assess environmental remediation adequacy
- Analyze zoning and entitlement path
- Score site using professional criteria
3. Development Program (15 points)
- Optimize unit mix for market
- Design efficient site plan
- Balance density with neighborhood concerns
- Integrate mixed-use components
4. Financial Analysis (20 points)
- Create detailed development budget
- Project operating income and expenses
- Calculate returns (IRR, equity multiple)
- Perform sensitivity analysis
5. Implementation Strategy (15 points)
- Design entitlement strategy
- Address neighborhood concerns
- Create realistic timeline
- Identify risk mitigation measures
6. Investment Decision (10 points)
- Make go/no-go recommendation
- Specify maximum land price
- Define required returns and conditions
- Present professional investment package
Your Professional Development Analysis:
VISTA RIDGE DEVELOPMENT – COMPLETE ANALYSIS
- EXECUTIVE SUMMARY:
- Project: 312-unit mixed-use development, Denver CO, $3.9M land
- Development Cost: $_____ million
- Projected IRR: ____%
- Recommendation: Proceed/Pass/Negotiate at $_____
- Investment Thesis: ________________________________
- MARKET OPPORTUNITY ANALYSIS:
- Denver Market Assessment:
- – Population growth: ___% annually
- – Employment growth: ___% (tech sector focus)
- – Multifamily vacancy: 5.2%
- – Rent growth: 4.8% annually
- – Key demand drivers: ________________________________
- Tech Center Submarket:
- – Major employers: ________________________________
- – Median income: $95,000 (supports rents of $_____)
- – Competition delivering: ___ units in next 12 months
- – Our competitive advantage: ________________________________
- SITE ANALYSIS:
- Physical Characteristics:
- – Size: 7.8 acres, allows ___ units/acre
- – Zoning: C-MX-8 (8 stories, mixed-use)
- – Environmental: Gas station remediated (risk assessment: _____)
- – Access: Requires signal at $400k
- Site Scoring:
- – Location: ___/30 points
- – Physical: ___/25 points
- – Regulatory: ___/25 points
- – Economic: ___/20 points
- – Total Score: ___/100
- DEVELOPMENT PROGRAM:
- Unit Mix Optimization:
- – Studios (450 SF): ___ units @ $_____/mo
- – 1BR (650 SF): ___ units @ $_____/mo
- – 2BR (950 SF): ___ units @ $_____/mo
- – 3BR (1,200 SF): ___ units @ $_____/mo
- – Total: 312 units, _____ SF residential
- – Retail: 15,000 SF @ $_____/SF NNN
🎯 Module 2 Complete: Land Development Mastery
Professional development follows a systematic 10-phase process
Market opportunity identification drives successful projects
Site selection requires physical, regulatory, and economic analysis
Financial feasibility determines go/no-go decisions
Due diligence prevents costly surprises
Entitlement success requires political and community management
Professional teams execute complex projects
Development packages must tell compelling investment stories
Risk mitigation separates professionals from amateurs
You now develop land better than most real estate professionals
✅ Module 2 Final Mastery Quiz
Question 1:
What is the most important factor in identifying development opportunities?
Question 2:
When evaluating a development site, which carries the most weight in professional scoring?
Question 3:
What is an option agreement’s primary benefit in land acquisition?
Question 4:
During due diligence, discovering the site is in a 500-year floodplain typically means:
Question 5:
The typical entitlement process timeline for a multifamily development is:
Question 6:
What is the most effective strategy for managing neighborhood opposition?
Question 7:
A development pro forma should include all of these EXCEPT:
Question 8:
The minimum target IRR for a typical development project is usually:
Question 9:
Construction financing typically requires what percentage of equity?
Question 10:
The most important outcome of Module 2 is learning to:
🎯 Ready to Complete Module 2?
Take the final quiz to demonstrate your mastery of Land Development & Planning and complete both Week 8 and Module 2!
Students achieving 90%+ across all lessons qualify for potential benefits with lending partners and employers.
