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HomeMy WebLinkAboutFrom Deals to Dollars_ Pro Formas, Banks & Partnerships - South Bend, October 2026From Deals to Dollars: Pro Formas, Banks & Partnerships South Bend, In - October 2026 Readying, steadying and nurturing places to take their future into their own hands. neighborhoodevolution.com 3 Bernice Radle Buffalo, NY Monte Anderson Dallas, TX Jim Kumon Minneapolis, MN Neighborhood Evolution Team Renovation + Preservation, Zoning Code Rewrites Incremental Redevelopment, Mixed-Use and Adaptive Reuse Residential New Construction, Infrastructure Feasibility 4 Mike Keen South Bend, IN Neil Heller Portland, OR Mags Hawley Minneapolis, MN Community Oriented Re-development Housing Policy + Regulation Reform, Infill Development Architectural Design + Site Planning Neighborhood Evolution Team Owner of Buffalove Development Little Wheel Restoration BERNICE RADLE Started Flywheeling: ●Maintenance calls for minimum wage. ●Energy retrofits and property management Known for: ●Cute renovations on a dime ●Small storefronts ●Trying to keep apartments affordable Community Involvement: ●Zoning Board of Appeals for the City of Buffalo ●Eugene V. Debs Social Hall Board Proudly from Buffalo, NY Principal Heirloom Properties Electric Housing Proudly from Minneapolis, MN JIM KUMON Started Flywheeling: ●Architecture and Construction ●Middle Housing Development Known for: ●New Construction Housing ●Green Building ●Zoning and Urban Design Community Involvement: ●Farmers Market Board Member ●Cub Scout Pack Leader ●Passive House State Chapter Board Member 7 Pillars to Town Making 7 1. Farming Find a place and stay there. Learn how everything in your life interacts. 3. Form Understand your neighborhood and its pattern. Build a place that ages well. 2. Finance Make enough money to sustain yourself, your projects, and your community. 88 *a healthy development ecosystem is where locals own, and benefit from reinvestment in their community. ECOSYSTEM* Everything around us, the relationships we share, and the way we evolve together 99 Not for Profit Public SectorPrivate Sector Finance Everything around us, the relationships we share, and the way we evolve together ECOSYSTEM* The Flywheel It takes you step-by-step through a small development project! We wrote a workbook! Get your pencils! Let’s see if the project is feasible Section 1 Walking Proforma Exercise Section 1 Section 2 Section 3 Proforma Evolves Current Personal Financial Statement: Should be less than six (6) months old Assess Yourself ▢ Copy of driver's license (or passport or official ID) ▢ Two (2) most recent years completed Federal Tax Returns Include any extension requests (if applicable) ▢ If titled in an Entity (LLC, LP, S CORP) Two (a) most recent years completed Entity Federal Tax Returns (signed): include any extension requests of applicable) ▢ Copies of bank statements to support any liquidity you noted on your personal financial statements ▢ Pro forma Operating statement for rental, plus information about any historical income and expenses. (Include comparable rents in the area to support your rent estimate) Copy of organization documents: ▢ Partnership Agreement ▢ Operating Agreement ▢ Certificate of Formation (for LP or LLC) ▢ Articles of Incorporation and Bylaws ▢ Tax ID Number ▢ Current Personal Financial Statement (signed) Should be less than six (6) months old ▢ Copy of Lease(s) (if applicable) ▢ Agreement of Sale (if applicable) ▢ Construction Budget (if applicable) ▢ Comparable sales in area to support your expected sales price ▢ Resume of professional experience Bank Prep ●Residential loans ●Commercial loans ●FHA, VA, Conventional ●Small Business Administration ●Private Money Loans ●Crowdfunding ●Credit Cards ●Home Equity Loans Loan Types Walking Proforma Walking Proforma Walking Proforma Walking Proforma Walking Proforma Walking Proforma Walking Proforma Walking Proforma Walking Proforma Walking Proforma Walking Proforma Proforma Calculator Scan for access to our spreadsheet! Costs, Costs, Costs Soft Costs, Operating Expenses, Hard Costs…Keeping track is challenging Section 2 Filling in your Expense Budgets Legal ●Why hire a real estate attorney? ●How do you hire an attorney? Accounting ●What are the differences between bookkeeping, accounting, tax prep services? ●How do you hire a bookkeeper? ●When to hire a tax accountant or CPA? Learn the legal and accounting part of owning real estate!Legal + Accounting 1. Title 2. Survey 3. Utilities 4. Zoning 5. Accessibility (ADA) 6. Environmental 7. Building Code 8. Insurance 9. Financing 10. Fire Code It costs money to answer questions!Legal + Accounting Know exactly what you are buying and its history Surveys, Title and Environmental ●What do you need from a Survey - What does it cost? ●Who does title, phase 1 and 2 reports, soils reports Zoning, Utilities and More ●What zoning things will you be dealing with? ●How good are public records are of utilities? ●How much money to budget to deal with public works, fire marshalls, and other? Surveys + Enviro How do you find (or become) a real estate broker? ●What is involved in writing an offer/contract? ●Making an offer: Letters of intent and purchase contracts ●Why the purchase contract is so important? How do you find an insurance broker? ●What kind of insurance do you need? ●How can you tell which insurance policy is the best for your property? ●Do you have to get certain types of insurance because the bank tells you to? Learn the acquisition and insurance part of owning real estateAcquisition / Insurance Understanding hard costs, soft costs and financing costs Key Budget Items & Tracking Begin with the End in Mind (Team Meeting) ●Present the big picture concept ●Know your rough budget number + contingency ●Have your design team lay out existing conditions & site constraints ●Allow the contractor to weigh in on challenging field conditions ●Anticipate the most important/costly trades and engage those early (HVAC, electrical, concrete, etc.) There is a difference between what’s possible and what’s cost effective: Get designers and contractors to collaborate on the best balance Getting Started Manage documentation! ●Discuss file sharing, scheduling logistics, and assign admin tasks ●If you are not good at paperwork, project management tasks, and meeting minutes (to-do lists), get someone to help or include that in services they provide (likely, the designer/architect) ●Re-run the proforma after every iteration of changes ○construction costs ○size of units/suites ○possible rent rates Getting Started New Construction Unique Elements of New Construction Due Dilligence Questions ●How will the project follow zoning rules ●What are the requirements for materials or features? ●Are utilities readily available from the street? What is needed to connect to them? ●Is the the site constrained or nearby to other buildings that would cause issues for construction vehicles, equipment, deliveries, or installations? ●Will shoring or other temporary measures be required? New Construction Unique Elements of New Construction Someone has to decide on everything! ●Decisions on interior finishes, systems, building envelope change costs and can be time consuming. Figuring out who specifies and procures these items early on. ●What will you project be compared to? What features do those buildings offer? ●Recruit a diverse group of project reviewers unaffiliated with the project to: ○catch errors in drawings ○get feedback on layouts ○look at functionality 39 Green Building and Weather Risk Management If you are considering incorporating green building techniques or weatherization strategies into your project, you need to state your goals and objectives up front. These can impact your tax strategy, utility rebates, operating expenses, insurance costs, building costs and features of your units that attract tenants and buyers. 4040 Roundtable on Detailed Budgeting Operating Agreements Loan Packages Section 3 Loans & Partners Loan Package Investor Partner Reasons you might need to establish an LLC A Limited Liability Corporation is a common legal entity for real estate. To create and manage one requires owners to determine the following: ●Defining ownership interests and responsibilities of each member ●Establish management structure and decision-making processes ●Specify how profits are allocated among members ●Outline capital contribution requirements from each member ●Establish mechanisms for resolving disputes among members ●Restrict the transfer of membership interests ●Spell out performed fees and include them in the agreement Operating Agreements Operating Agreements Beware the handshake trap! Why Bother? ●Without an agreement, your state's default LLC rules decide for you, and they rarely fit a real estate deal ●It protects the friendship as much as the money Operating Agreements Who Brings What? ●Cash, credit, sweat equity, deal-finding, and guarantees on the loan ●How ownership percentages get set ●Capital calls: what happens when the roof surprises you and someone can't pitch in? Operating Agreements Who Decides What? ●Day-to-day manager vs. big decisions? ●The "everyone has to agree" list: ○selling ○refinancing ○new debt ○adding partners ●A deadlock plan so you're never stuck Operating Agreements How the Money Flows ●Order of payouts: ○return of capital ○preferred return ○(and then) the profit split ●Paying partners for their work ○property management ○construction oversight ○development fees ●Reserves before distributions Operating Agreements The What-Ifs and the Exit ●Death, divorce, disability, or someone just wanting out ●What to determine ahead of time: ○How and when the deal ends ○Buy-sell terms ○Right of first refusal ○How the property gets valued ●Final tip: Have a real estate attorney draft or review it! Multi-year live spreadsheet hello@neighborhood evolution.com @neighborhoodevolution Ready to take the next small step? Contact us!