How housing development works from land to lease-up: the pro forma, the capital stack, the risks, and the decisions that determine what actually gets built.
Development is the process that turns a piece of land and a set of rules into homes. It runs from site control through entitlement, design, financing, construction and lease-up, and at every stage the developer is spending money that will not be repaid unless the finished building earns enough rent. The tool for testing whether it will is the pro forma, a projection of costs, revenue and returns.
This section is about how that process actually works: who the parties are, what they risk, how a project is judged feasible or not, and why so many proposed buildings never break ground. If you are new to the subject, start with the Housing 101 sequence, which walks through the whole cycle in eight short lessons.
We build an illustrative 120-unit apartment project on paper, line by line, and show where every dollar of the rent it requires comes from.
Housing 101
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.
Housing 101
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.
Housing 101
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.
Housing 101
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.
Housing 101
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.
Housing 101
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.
The evergreen pieces that explain the mechanics behind everything else in this topic.
Housing 101
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.
Housing 101
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.
Housing 101
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.
Housing 101
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.
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