Real Estate Development

1
Real Estate Development
Ray Lei Aaron Todd Trevor Jacka
2
Project

• We looked at the feasibility of developing a
  piece of land in Lake Chelan, Washington.
  
• 37 acres on hillside, overlooking the lake.
• Gated community

3
The Property
4
Target Market

• Draw home buyers from Washington metropolitan
  cities (East West)
  
• Examined the demographics of Washington citizens
• A potential buyer will be able to spend 30 of
  their income on a home
  

5
Lake Chelan

• Centralized location
• Recreation destination
• Glacier fed lake

6
Competition

• 1/3 acre lots selling for 300,000
• Our strategy is to provide more land at a lower
  cost
  
• Provide a luxury vacation home at a low
  production cost (106.25/Sq. Ft.)
  

7
Subdivision process

• Land acquisition
• Excavation, roads, and infrastructure
• General contracting process
• Community ordinance

8
Numbers
9
Cash Flows
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Findings

• The more homes we sell the better
• 30 homes at 1 acre-yields (1,937,935) NPV
• 60 homes at .5 acre-yields 117,222 NPV. With an
  IRR7

11
Change in Homes
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Change in Homes
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Conclusion

• We need to push our houses
• If we cant find a market for 60 new homes in
  Lake Chelan, then this project is not feasible