Housing 101

1. 1

   Lesson 1: How Housing Gets Built

   Land control, due diligence, entitlements, permits, financing, construction, lease-up. Each stage of building housing has costs and risks, and each month between stages adds to the rent the finished building must earn.

   7 min read

2. 2

   Lesson 2: Who Pays for Development?

   Lenders and investors front the cost of a new building in layers, each with its own risk and return. Renters repay them through rent, and sometimes the public covers part of the cost through subsidies.

   6 min read

3. 3

   Lesson 3: How Developers Determine Whether a Project Works

   Revenue, vacancy, operating expenses, net operating income, yield on cost, cap rate, DSCR, cash-on-cash. The pro forma decides whether a building gets built. If the math does not close, nobody builds.

   6 min read

4. 4

   Lesson 4: What Determines Rent?

   Two different questions: what rent a landlord can charge (set by the market) and what rent a new building needs (set by cost). Where market rent falls short of required rent, nothing gets built.

   6 min read

5. 5

   Lesson 5: How Apartment Financing Works

   Most of the money in an apartment building is borrowed. This lesson explains the construction loan, the permanent loan, how lenders size them, and how the mortgage constant turns debt into rent.

   6 min read

6. 6

   Lesson 6: Why Investors Require Returns

   The owners of a new building put in the money that absorbs losses first. This lesson explains why that money has a price, how the price is measured, and what happens to construction when it is not paid.

   6 min read

7. 7

   Lesson 7: How Government Affects Housing Economics

   Zoning, codes, approval timelines, fees, taxes, wage rules and subsidies all reach into the pro forma. This lesson maps which lever moves which line, so the tradeoff behind each rule can be judged.

   6 min read

8. 8

   Lesson 8: How Supply and Demand Affect Rent

   The rent on an existing apartment is set by the market, not by what it cost to build. New construction is the link between cost and market rent. This lesson explains how that link works and why it matters.

   6 min read

Terms used along the way are defined in the glossary. When the sequence makes sense, The Housing Breakdown applies all of it to a single building, line by line.