Housing Giants - May 9, 2008 - (Page 15)

both groups informed me when I first asked about their thesis. I responded, as a former developer and builder, that that wasn’t how to determine real value. GETTING YOUR THESIS RIGHT You need to consider several points when you create your own personal thesis for raising additional capital. I explained that a builder would review the site; determine what products could successfully be marketed; and build a matrix using current house prices and absorption rates. I explained that during 2008 and 2009 there would be little opportunity to raise prices or improve absorption rates; that there would be some improvement to both in 2010; and then a gradual return to a more normal market in 2011 and 2012. The matrix would then produce a residual current value. Further, I suggested we assume that thereafter price increases would track inflation but not much more. I added that their thesis was missing the benefits of good management — the people aspect. Great WWW.HOUSINGGIANTS.COM managers can take a C+ or B- project and turn it into a home run, or a poor manager can run an A project into the ground. I reinforced that home building was a local business that required local expertise and good market intelligence to achieve the results they wanted. The net result: some new alternative capital sources are convinced it makes sense to partner up with knowledgeable local and regional builder-developers with successful franchises and reputations for 5.9.08.HOUSING GIANTS 15 http://WWW.HOUSINGGIANTS.COM

Table of Contents Feed for the Digital Edition of Housing Giants - May 9, 2008

Housing Giants - May 9, 2008 Contents Viewpoint News and Moves Tech M & A The New Housing Demographics

Housing Giants - May 9, 2008

For optimal viewing of this digital publication, please enable JavaScript and then refresh the page. If you would like to try to load the digital publication without using Flash Player detection, please click here.