Key Takeaways
- Development budgets have hard costs (60-70%), soft costs (15-25%), and financing costs (10-15%) plus contingency.
- Construction interest carry is often underestimated and can reach 10-15% of total development budget.
- Draw schedules must be modeled monthly to accurately calculate cumulative interest on funds disbursed.
- Lease-up modeling projects monthly occupancy growth from zero to stabilization (90-95% occupancy).
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Test Your Knowledge
1.Why must development pro formas use monthly rather than annual periods?
2.What is a draw schedule in development modeling?
3.What does "lease-up to stabilization" model in a development pro forma?