Make It Pencil

Every real estate deal comes down to one question. Does it pencil?

Most of the time the honest answer is almost. Closing the gap takes more than a spreadsheet. Behind every number sits an economic model, a legal document, and a person who knows something you do not. Adverse selection, imperfect information, and plain human psychology decide as many deals as cap rates.

Make It Pencil puts the economics and the arithmetic on the same page as the law and the people. Nineteen chapters explain the concepts. Fifteen cases hand them to one firm, Meridian Residential Partners, as it works through a market it cannot crack, a land assemblage, a closing, a public land RFP, a capital raise, a lease-up that misses and a loan that matures at the wrong moment. The people recur and the consequences carry forward from one case to the next.

Every exhibit can be rebuilt by hand from the inputs on the page. Every case ends with a decision you have to defend.

Inside:

• Residual land value, yield on cost and the development spread, worked from first principles
• Reading contracts, easements and recorded agreements the way counsel does
• Comp sets, concessions and the numbers that lie
• Assemblage and plottage priced as a probability rather than a best case
• Building types, unit mix and parking as a capital decision
• Waterfalls, preferred returns, refinancing and loan maturities
• Filtering, redevelopment options and building in a constrained era

Written for the analyst in their first years, the career-switcher from finance, law or construction, the graduate student, and the private investor who wants to understand how cities get built, and who gets paid for it.