A short lecture on real estate entrepreneurship, valuation, funding, and development process by Shaheryar Mian.

1. Entrepreneurship
and Real EstateBy Shaheryar Mian
Entrepreneurship
and Real Estate

2. My journey to becoming a Real-Estate Entrepreneur
2002–2005
Bachelor degree in
Finance from McGill
University
2005–
2010
Worked in Financial
Services starting with
Lloyds Bank in London
for 5 years
2010–
2012
Master Degree in
Liberal Arts from
Harvard University
2012–
2014
Management
Consulting at Gallup
Consulting in New York
2014 –
Present
Family biz in real estate
& entrepreneurship in
US & Canada
2019–2020
Executive MBA program
at Oxford University

3. What is
Entrepreneurship
A means to get
rich ?
Be your own boss
(2 out of 3 in the
world think it’s a
good choice)
Have more control
and leave a legacy
An attempt to
make something
better (Innovation
Vs Invention)
Have more free
time for yourself
Love what you do Entrepreneurs are
more honest than
the corporate
world ?
Problem solving
Lets discuss what Entrepreneurship is not and
clarify some misconceptions

4. Real Estate Development Process
• Land acquisition and Feasibility: highest and best use analysis. Consultants hired to conduct preliminary
market studies, massing studies, conceptual designs, and outline for the permitting project
• Financial analysis is also part of the feasibility analysis where you would develop a project budget and
project cash flows and IRR analysis. This also involves whether you wish to create a condominium
complex or rental building
• Municipality introductions, influencing, and lobbying
• Preconstruction: environmental studies, site servicing, design iterations, construction suppliers
interviewed and shortlisted, and financial resources committed. At the conclusion of this phase decide
whether to proceed, wait, or exit
• Information sharing is key during the development process – for instance, architect and structural
engineer must work together on column locations and their integration with architectural elements –
architect wants to achieve a certain floorplan while the engineer wants to ensure the structure is
efficient and built to code
• Construction phase: excavation, foundation, pouring, building, windows, interiors, and final touches
• Completion and handover: occupancy permit, fire and safety approvals, and closings (move-ins) + after-
sales support
Site Acquisition Permitting Construction Sell or Rent

5. Risks and Analysis
TIMING:
YOU MIGHT START
THE PROJECT IN A
GIVEN YEAR WHEN
CONSTRICTION
MATERIAL COSTS IS
HIGH AND BY THE
END OF THE PROJECT
THEY MIGHT HAVE
DROPPED. STEEL
PRICES DUE TO NAFTA
EXAMPLE. IN
ADDITION, CONDO
PRICES MIGHT ALSO
HAVE CHANGES
WHICH IMPACTS
YOUR FINANCIALS
GENERAL CONTRACTOR
(GC) RISK:
YOU CAN DO IN-HOUSE
OR OUTSOURCE. POSES A
MAJOR RISK FACTOR
SINCE GC
INCOMPETENCE CAN
CAUSE MAJOR DELAYS
AND COST OVERRUNS.
HARD TO FIND A GOOD
GC
FINANCING RISK:
BANKS CAN ASK YOU
TO PUT IN MORE
EQUITY SHOULD
SALES BE POOR OR
MARKET CONDITIONS
WORSEN → DEBT
SERVICING RISK
MARKET RISK:
COMPETITIVE FORCES
MIGHT HAMPER
SALES, CHANGING
PREFERENCES, AND
MUNICIPAL CHANGES
/ INITIATIVES (GOOD
OR BAD I.E ZONING)
BUILDING CODES
AND REGULATIONS:
ENSURING
EVERYTHING FROM
SPRINKLER SYSTEMS,
FIRE SAFETY EXITS,
PARKING SPOTS,
HALLWAYS,
ELEVATORS, AND
MATERIALS USED ARE
BUILT TO CODE SET BY
THE DEPARTMENT OF
BUILDINGS, FIRE
SAFETY DEPARTMENT,
ENVIRONMENTAL
PROTECTION AGENCY,
AND DEPARTMENT OF
TRANSPORTATION
LEGAL RISK:
FIGHTS WITH
CONTRACTORS,
SUPPLIERS, AND
EMPLOYEES
WEATHER RISK:
UNFORESEEN SEVERE
WEATHER CAN DELAY
YOUR PROJECT
(CANNOT WORK PAST
MINUS 15 DEGREES
OR EXTREME HEAT
CONDITIONS)

6. Valuations
• Determining the purchase or asking price of real estate property is the most sought after variable for real estate
valuation
• How do we derive value? : PV of future cash flows. In estimating real estate value you need to consider (i) Demand for
the property and surrounding area, (ii) Utility: does the property have the capacity to satisfy future owner’s needs, (iii)
Supply: are there competing properties available ? (iv) Transferability: the ease with which ownership rights can be
transferred (no holds or liens on the property). Taking these into account you must also take into account governmental
policies and controls, environmental conditions, economic, and social trends.
• Three main methodologies to appraise property value:
• (i) Comparable Sales: used for single-family homes – this is an estimate derived from comparing a property with recently sold properties
with similar elements such as size, physical features, location, and age. Must have been sold within 1 year, and under normal market
conditions. Common metrics used our price per sq.ft as your baseline
• (ii) Cost approach: used to estimate value of the properties that have been improved by a building. Separate estimate of the value for the
building and the land which are added together to get total value. Used for properties that don’t generate income such as schools, and
churches. You could use the cost per sq.ft to estimate cost by finding a recently built comparable. You must take into account depreciation
that would negatively impact the value – such as roof, and structural problems
• (iii) Income Capitalization approach: based on relationship between the rate of return an investor requires, and the net income the
property produces. Used for income producing properties such as rental buildings. Steps: (i) Estimate the annual gross income (take into
account vacancy) (ii) Estimate and deduct operating expenses such as utilities and payroll and subtract these to calculate NOI, (iv) Estimate
the price an investor would be willing to pay for the income produced by the property – done by estimating the IRR (capitalization rate). (v)
Apply the cap rate to the NOI to calculate the property value
• One of the most efficient ways to get rich with use of leverage to create real tangible value
• In Real Estate Finance there are 2 main valuation techniques: Precedent transaction analysis, and DCF analysis
• Notes on DCF analysis: it is subjective method because it relies on estimates for large number of inputs that include cash
flows, discount and rates. You can make these assumptions reasonable by taking into account market price per sq.ft,
industry outlook reports, and cost per sq.ft of materials

7. Case Study – Waterview Project (success)
• First Condominium in the Town of Grimsby’s history
• Methodical: market research to discover need for condominiums in a town with high
income from buyers in 50 - 55 age range and empty nesters
• Resourcefulness and creativity: all-round media effort to target potential customers
through: newspapers, direct mail, TV, facebook, signs, and radio
• Gave project a theme: Miami-inspired lakefront living in Grimsby (empty nesters
dreamed of living in Miami so we brought the lifestyle to their doorstep)
• Challenges: limited budget – 3D models and VR (scale model) | Inexperienced team
| Track record of builder
• Local business partnerships: wineries and Newport beach club
• Collaboration with local community: Habitat for Humanity
• Allowed team to make mistakes and fail – led to greater responsibility and ownership
of tasks

8. The Waterview Project

10. Case Study: Restaurant business NYC (failure)
• Concept | Location | Experience
• View failure as a scientist: it’s a data point
• Emotions in business and decision making
• Big picture V.S Attention to detail
• Trust and legal comprehension
• Pivoting – can you change your business model ?
• How to learn from failure
• Contingency planning (helps serve as devil’s advocate)
• Typical failure reasons: 42% no market need, 29% ran out of cash,
23% not the right team, 19% too much competition, and other
issues

12. Starting a company -
considerations
• Solo mission or founder ?
• Ideation and testing: prototype – utilize the co-working eco-
system and labs
• Idea can be better than the reality - not every idea translates
into a good business
• Barrier to entry and financing
• Revenue generation capacity and scalability
• Fund raising potential and growth story. Knowing where and
how to finance
• Friends and Family | VC | Angels
• Exit strategies

13. The Entrepreneurial Path
• Starting your own business versus working for a company
• Is it possible to work for a company and still be entrepreneurial ?
• How about making a switch from Entrepreneurship to a company
(fear of leaving the traditional path to employment)
Education
Professional
World
Entrepreneurship
More Education ?
Professional
World?
- 95% have bachelor degrees and 47% have advanced degrees – not everyone is a dropout like Zuckerberg & Gates
- Average age: 40 years and 70% are married
- 36% start a business during studies

14. Traits, Habits, and Personality
Legal
Comprehension
Highs and Lows
on the same day
Problem Solving
Resourcefulness
and multi-skilled
Rule breaker
The world is fair
or unfair ?
Loneliness and
balance
Leadership –
what is it ? Can
you learn it ?
Habits and work
out routines

15. Questions and Discussion
Research Sources: Forbes, Entrepreneur.com, Business Insider, Census.gov, CNN, Ernst and Young, CNBC, and Huffington Post
+
Biased opinions from personal experiences