NYU Stern School of Business

Undergraduate College

MULT-UB.0050.001 (C70.0050): Real Estate Development and Entrepreneurship

Spring 2013

Instructor Details

Chernoff, Harry


Tuesday, 4:00 - 5:30PM, or by appointment

Room KMC 8-68


*Please note that this is the Fall 2012 version of the syllabus for your reference. The Spring 2013 syllabus will be posted soon with minor changes.


Professor Chernoff has owned and operated a real estate development company, HMS Properties, Inc., since 1980.  Many of the examples discussed in class will come from actual projects that he has completed.


Course Meetings

T, 6:00pm to 9:00pm

KMC 4-80

Final Exam:

Schedule exceptions
    Class will not meet on:
    Class will meet on:


Course Description and Learning Goals

•    This course will introduce students to the broad aspects of real estate development from an operations perspective.  It is directed to students interested in real estate development from the point of view of three classes of investors:
   o    an entrepreneurial investor, looking to buy a coop, condo or small property for individual use or rental
   o    a working general partner of a small group of investors, who will actually manage &/or be responsible for overseeing the property after purchase
   o    a passive outside investor, who may be searching for an investment that is limited in liability to the original investment
•    Operations Management involves the decisions made at the operating level of a business or project to assure the attainment of higher level goals and strategies. In real estate development, these operating decisions will determine whether or not a deal will be successful and meet overall financial goals. Many students may choose to pursue investments in real estate, and often to actually operate and manage the properties. Although most students will not work full-time in the real estate industry, property investments will arise as opportunities to increase passive income and wealth.  Understanding how these deals are created and managed will allow investors to choose deals with the highest probability of success. The real estate topics discussed in the course will include all types of development: residential, hotel, office, retail, land and industrial properties. In addition to case studies, class lectures and discussions, some outstanding entrepreneurial developers will be invited as guest speakers to reinforce the ideas taught in class. The class will include a real estate development project, with group presentations to the class, and potential outside investors.



The topics of the course will follow the primary focus of developing a real estate project. Each of the major stages will be addressed, identifying alternatives and analytical models for decision making.  Some techniques from the core Operations Management course will be utilized, for example Project Management models for optimally managing complex projects (CPM, PERT, etc.).


Text and Readings

The text (OPTIONAL), Real Estate Development - Principles and Process (RED), is a very complete text on the topic. It is probably more intensive than the average real estate investor needs, but the extreme depth and scope of the book will assure coverage of almost all real estate issues and types of properties.  This is an excellent reference book to keep and use beyond this course.  Your need (desire) for this will determine if you buy it.The topics are designed around the concept of the development process.  This text captures an understanding of the process with a model of real estate development that first studies the interrelated activities that constitute the process. With such knowledge in hand, one can then proceed to understand the particular product types and local markets necessary for successful development.

The Real Estate Game (REG) (REQUIRED) is a book about the real estate business, written in simple terms, and using the analogy of a game (rules and key players) to demonstrate how to take advantage of emerging opportunities in the property market.  It is written in a personal and enthusiastic manner, and is useful to investors interested in properties ranging from small houses to large, multi-use projects.

Timing the Real Estate Market (TREM) (REQUIRED.  Now an eBook, info on Blackboard) expresses the opinion that timing is the most important aspect of real estate development and investing.  Clear strategies are discussed as to how to identify and take advantage of the crucial major trends behind real estate cycles.


Optional Text

Real Estate Development: Principles and Process; Miles, Bernes, Eppli and Weiss; Fourth Edition; ULI- The Urban Land Institute; 2007.  (RED: P&P)


Required Course Reading

The Real Estate Game; William Poorvu; The Free Press; 1999.  (REG)


Timing the Real Estate Market; Craig Hall; McGraw Hill; 2004  (TREM) Now an eBook. Purchase information on Blackboard.


Optional Reading

1. Rich Dad, Poor Dad; R. Kiyosaki; Warner Books; 1998
2. Confessions of a Real Estate Entrepreneur; James A. Randel; McGraw Hill; 2006
3. The Death and Life of Great American Cities; Jane Jacobs; Vintage Books Edition; 1992
4. The Coming Crash in the Housing Market; John Talbot; McGraw Hill; 2004
5. The Lexus and the Olive Tree; Thomas Friedman; Anchor Books edition; 2000
6. Against The Gods (The Story of Risk); Peter Bernstein; John Wiley & Sons; 1998
7. The Power Broker; Robert Caro; Vintage Books; 1975
8. A Random Walk Down Wall Street; Burton Malkiel; W. W. Norton & Company; 2003



In the first class you will form groups of three (3) or possibly four students each.  Some of the Case Analyses, and the Project Presentations will be performed/submitted by groups.  It is expected that all members will have an input on all papers and all work, i.e. the assignments should not be broken up among the group.  Anyone not sharing in the group work will not get credit for that assignment.  Let me know about any problems early on.


Course Work and Requirements

Assignments will include five real estate cases throughout the semester. You will analyze all of these cases, and choose four of the five cases to actually prepare and submit a written presentation. Two of these analyses will be done individually, and two by groups.  These assignments should be 3-5 pages of text in length (not including any appendices), and be submitted at the beginning of the session on which they are due.  Keep a copy for your reference during class.  All members are expected to participate in each assignment, and understand anything that is presented in your group paper.  If you miss your group meeting and/or do not participate in the assignment, you are expected to do the work on your own, and submit it separately. For the location of the cases, see the Course Documents section in Blackboard.

A term project will be prepared and presented by groups, focusing on a pitch to investors to invest money in your deal. The deal will include the purchase and planning of a real estate development project. The presentations will be oral, and will be presented to the class in Sessions 10 and 11. The specific topic (property) will be selected by the group, and must be approved by the professor. Your proposal for your project will be submitted to me at the beginning of class in Session 3, February 21st.   An Outline (initial) is due Session 5 (March 6th). 5% of your course grade is based on this outline being submitted on time and in acceptable form. The Term Project will count as 35% of your course grade (5% for the initial outline and 30% for the completed project).

A completed outline is due Session 7 (March 27th).                                                                                                     

I propose that the deals should be of a size that is consistent with our course focus, relatively small and entrepreneurially oriented.  A comfortable range might be $500,000 to $5 million.  Note that if you choose an apartment building in NYC, you should become familiar with the Rent Guidelines Board and its determination of rent increases, as well as understand the rent control and rent stabilization laws and their financial impact, if any, on the property you have chosen.  Included should be a clear identification of the opportunity that you see in the development, and a clear plan for exploiting this opportunity.  You will need to describe the deal, show analysis of its viability, and identify all construction, changes in use, etc. that are planned.  Alternative strategies for the property are always useful to include.  Analysis should be qualitative and quantitative.  It is expected that you will calculate and show cash flow projections and returns (for both the property and the investor).  You should estimate the amount of resources necessary to bring the deal to completion, and determine appropriate target leverage levels.

An oral (in class) presentation (20-30 minutes) will be delivered to prospective investors (guest investors).  The particular investor you will be presenting to will be identified and described at least a week prior to your presentation.  An outline of your presentation must be submitted at least a week prior to your presentation date.  This outline will be given to the class and the investors, so that we can understand the deal and prepare for the presentation.  It is planned that these presentations will take place on one or two evenings (Session 10 and/or 11). 

An understanding of the political process associated with real estate development is important.  Students are required to attend at least one public meeting of a governmental agency at which the major topic involves real estate. Acceptable meetings include Architectural Review Board, City Planning Commission, Community Redevelopment Agency, City Council, Board of Standards and Appeals, Zoning Board, Legal Proceeding and Rent Guidelines Board.  A one page report on the meeting is required and should cover the purpose of the meeting and its impact on the development process.  By March 20th (Session 6), you will submit the name and date of the meeting you plan to attend (or have attended).




Class Participation, Attendance                                                            5%

Four Case Analyses (Can use best 4 of 5 assigned)                           20%

Term Project – Group written presentation OR a Group oral

   presentation to an investor. Initial Outline submitted timely            5%

                                                Term Project Presentation                   30% 

Mid Term Exam (in class)                                                                   35%

Outside Meeting – one page summary                                                 5%


Class Participation and Attendance

(keep in mind: 5 points for this section)


The development of speaking and listening skills is considered an important part of your evaluation in this course.  Please use the following guidelines to determine your effectiveness in class participation:




Class Website and Homepage

The class website has been created on Blackboard. It may be accessed from the login page



Course Outline




Fall Semester 2012



SESSION 1:   (Tuesday, October 2nd, 6:00-9:00pm)


1.      Read Chapter 1, 2 and 3 in Real Estate Development: Principles and Process (RED:P&P) which introduce the issues and process of RE development

2.      The benefit of passive income: How to get out of the Rat Race (some of the concepts discussed in “Rich Dad, Poor Dad” will be presented. This is on the optional reading list.)

3.      Read the American Dream case (HBS 9-390-089) on Harvard Business Online Website (see Course Documents in Blackboard)

4.      The following questions will help in analyzing the case:

a.       How will the Hanlon’s financial plan be affected by their real estate decision?  How will the decision affect their lifestyle?

b.      What risks face the Hanlons? What can they do to manage these risks?



SESSION 2:  (Tuesday, October 9th)


1.      Read (Skim) Part II (Ch 4, 5 and 6) on the history of RE development (RED:P&P).

2.      Read, analyze and be prepared to discuss the American Dream case (HBS 9-390-089 on Harvard Business Online Website). This case examines some of the basic issues confronting the Hanlons as they analyze their housing alternatives.  These issues are very common to people buying a home, and you may have experienced some of these issues personally.

3.      SUBMIT AS CASE ANALYSIS #1 (to be done individually):  Analyze the Hanlon’s situation, identify the key issues involved in their decision, and make a recommendation to them.  Support your recommendation with any assumptions you make, analysis of alternatives, and sensitivity analysis. Use an appendix for any numerical calculations. (See the general description of these case analyses in the syllabus.)

4.      Introduction of set-ups, terminology and analysis techniques.



SESSION 3:  (Tuesday, October 16th)


1.      Read Chapters 10, 11 and 12 on bringing ideas to reality in RED:P&P.

2.      Read Chapters 1 and 2 in The Real Estate Game (REG)

3.      SUBMITAS CASE ANALYSIS # 2 (to be done individually):Read and analyze the five set-ups included in Opportunities in Real Estate. Do opportunities exist in these potential deals? How could they be exploited?

4.      TERM PROJECT: Your group should present a written proposal for the term project at the beginning of class. It should include the address of the property and a brief discussion of your planned development.



SESSION 4:  (Tuesday, October 23rd)


1.      Read Parts 4, 5 and 6 in TREM. This includes chapters 11-16.

2.      Read Chapters 6, 7 and 8 in REG.

3.      In addition to standard buy and sell mechanisms, we will discuss other alternatives such as long-term leasing, flipping and holding property.


4.      In this class we will welcome Mr. Allan Berlowitz, Esq., who will discuss the strategies concerning working with attorneys in real estate development and management scenarios.  What qualities to look for in an attorney, and what expectations you should have are crucial to effective legal dealings with buyers, sellers and tenants.  Proper examination and preparation of leases are important to secure positive outcomes of future potential legal proceedings.

5.      Read, analyze and be prepared to discuss the R+D Lipstick, Inc. legal case.

Mr. Berlowitz and other Guest Attorneys will review this case with the class, argue         the case, and highlight the important aspects.



SESSION 5: (Tuesday, October 30th)


1.      Read the Revere Street case (HBS 9-800-147; access through the HB Online site).  This case involves the finding and acquiring of a small income producing property.

2.      SUBMITAS CASE ANALYSIS # 3 (Group paper):  Analyze the Revere Street case. Organize  your analysis by answering the following 4 questions:

a. How did Alexander search for his property?

b. How would you evaluate the Revere Street property? What are the risks and rewards?

c. How would you evaluate Alexander’s search for a mortgage?

d.       What do the numbers look like? Should Alexander make this investment?

3.   Read Chapters 16, 17 and 18 on planning and analysis in RED:P&P.

4.   Read Chapters 3, 4 and 5 in REG.

   5.   For this classwe will have a Guest Speaker, Mr. Kit McQuiston, who will lead the Revere Street case analysis, and discuss a recent real estate development project of his in downtown Manhattan.

   6.   TERM PROJECT: Submit an (initial) outline of the Group’s Term Project at the

beginning of class (or prior by email). This should contain section heading for each section the project will contain. Section details not necessary.



SESSION 6:  (Tuesday, November 6th)


1.      Read Timing the Real Estate Market (TREM), Parts 1-3.  This includes Ch 1- 10.

2.      Submit the name (date and location) of the Professional meeting you plan to attend (by hand-in at the beginning of class, or by email prior to class).

3.      Read the 286 Spring Street case. Try to understand the history of this building and the current situation. We will discuss this real estate development project in class. Next week we will actually visit the property on Spring Street.

4.      Often the choice of entity which will own a property is unclear.  In the second half of this session we will discuss the alternative entity choices and how to determine the best one for a specific deal.

5.      Also, in this class session we will discuss some of the important aspects of a Due Diligence list, and the important features in preparing and negotiating a Purchase and Sale contract.



SESSION 7: (Tuesday, November 13th)

1.      This night we will meet at 6:00pm at 286 Spring Street, on the 6th floor. The building is located on the SE corner of Spring Street and Hudson Street (it is an L-shaped building that surrounds a parking lot).

2.      After we visit the building, we will report back to our classroom at Stern for further discussion.

3.      In the second half of this class we will discuss buying property in new areas, places that the developer may be unfamiliar with.  Here the importance of broker relationships is intensified.  Examples of retail and office development opportunities in the Las Vegas market will be discussed.

4.      Read and analyze the Spanish Trails case.

5.      SUBMIT AS CASE ANALYSIS #4  (Group paper)  Follow the questions at the end of the case as a guide for your analysis.

6.      Cap rate changes and the resultant valuation changes will be examined.

7.      TERM PROJECT: Submit a completed outline of the Group’s Term Project at the beginning of class (or prior by email). This outline should contain the complete project and each section should have some completed detail.

8.      Next week is our Midterm exam. In Session 7 in Blackboard you will find some material that will be helpful to your preparation. There is a list of real estate vocabulary in the vocab doc. Also, there are some practice short answer questions (with answers). See if you have any questions about any of these terms or questions, and if so, ask about them in Session 7.



SESSION 8: (Tuesday, November 20th)

1.      In the first part of this session we will take a Mid-term exam.  Details of the test will be discussed prior to this date.

2.      After the midterm we will discuss developing hotel properties and the Chelsea Inn.

3.      Read the Chelsea Inn case. In class we will discuss this unique topic of hotel properties, the specific choice of ownership entity for the Chelsea Inn, and the resulting advantages and disadvantages. Answer the five questions at the end of the case.

4.      Pricing techniques that optimize supply and demand factors (Yield Management), will be discussed.



SESSION 9:   (Tuesday, November 27th)


1.      Read Chapters 19 and 20 in RED:P&P on implementing the development.

2.      Read “ Advanced Tools for Project Scheduling” and “Managing and Controlling Project Resources”; Karen A. Brown; McGrawHill, Primus Online e-book (see Course Documents for purchase and access directions)

3.      In preparation for this session you should view the video Skyscraper, depicting William Zeckendorf’s three year project constructing a skyscraper in Manhattan.

4.      Our guest speaker will be Mr. Dominic Fonti, the head of HRH (at that time), the construction company that actually built the property.  Mr. Fonti will help us understand some of the complexities in building a skyscraper.       

5.      Read, analyze, and be prepared to discuss the Horizon Builders case. Identify all of the tasks involved in one of their home constructions, list the immediate predecessors of each task, and note the duration of each task. All information you need is provided in the case.

6.      In the second half of the class we will examine the Project Management issues involved in the Horizon Builders case.

7.      SUBMIT AS CASE ANALYSIS #5 (Group paper):  Develop a network diagram for Horizon’s home construction and identify the critical path.  Answer the questions at the end of the case.



SESSION 10: (Tuesday, December 4th)


1.      In this session we will begin our student group oral presentations to a potential investor. Groups will present their proposals to a guest investor, followed by Q&A.  Guest investors to be announced.

2.      Read Chapters 7, 8 and 9 in RED:P&P on financing the deals



SESSION 11:   (Tuesday, December 11th)

Continuation of the In-Class student group oral presentations



SESSION 12:   (Tuesday, December 18th)


1.      Topics will include the real estate market recession, supply and demand, zoning effects and the Shepherd House development.

2.      Read Chapters 21, 22 and 23 in RED:P&P on making deals successful.

3.      Read Chapter 9 in REG which summarizes the Real Estate Game.

4.      Read Part 6 in TREM, including Chapters 17 and 18.

5.      Submit the one-page write–up of your Professional Meeting.

6.      As a review of the course, we will discuss the current conditions of the RE market.


Assessment Components

See "Grading" Section above.


Stern Policies

General Behavior
The School expects that students will conduct themselves with respect and professionalism toward faculty, students, and others present in class and will follow the rules laid down by the instructor for classroom behavior.  Students who fail to do so may be asked to leave the classroom. 


Collaboration on Graded Assignments
Students may not work together on graded assignment unless the instructor gives express permission. 


Course Evaluations
Course evaluations are important to us and to students who come after you.  Please complete them thoughtfully.


Academic Integrity

Integrity is critical to the learning process and to all that we do here at NYU Stern. As members of our community, all students agree to abide by the NYU Stern Student Code of Conduct, which includes a commitment to:

The entire Stern Student Code of Conduct applies to all students enrolled in Stern courses and can be found here:

Undergraduate College: http://www.stern.nyu.edu/uc/codeofconduct
Graduate Programs: http://w4.stern.nyu.edu/studentactivities/involved.cfm?doc_id=102505

To help ensure the integrity of our learning community, prose assignments you submit to Blackboard will be submitted to Turnitin.  Turnitin will compare your submission to a database of prior submissions to Turnitin, current and archived Web pages, periodicals, journals, and publications.  Additionally, your document will become part of the Turnitin database.


Recording of Classes

Your class may be recorded for educational purposes


Students with Disabilities

If you have a qualified disability and will require academic accommodation of any kind during this course, you must notify me at the beginning of the course and provide a letter from the Moses Center for Students with Disabilities (CSD, 998-4980, www.nyu.edu/csd) verifying your registration and outlining the accommodations they recommend.  If you will need to take an exam at the CSD, you must submit a completed Exam Accommodations Form to them at least one week prior to the scheduled exam time to be guaranteed accommodation.


Group Projects

Guidelines for Group Projects

Business activities involve group effort. Consequently, learning how to work effectively in a group is a critical part of your business education.

Every member is expected to carry an equal share of the group’s workload. As such, it is in your interest to be involved in all aspects of the project. Even if you divide the work rather than work on each piece together, you are still responsible for each part. The group project will be graded as a whole:   its different components will not be graded separately. Your exams may contain questions that are based on aspects of your group projects.

It is recommended that each group establish ground rules early in the process to facilitate your joint work including a problem-solving process for handling conflicts. In the infrequent case where you believe that a group member is not carrying out his or her fair share of work, you are urged not to permit problems to develop to a point where they become serious. If you cannot resolve conflicts internally after your best efforts, they should be brought to my attention and I will work with you to find a resolution.

You will be asked to complete a peer evaluation form to evaluate the contribution of each of your group members (including your own contribution) at the conclusion of each project. If there is consensus that a group member did not contribute a fair share of work to the project, I will consider this feedback during grading.


Professional Responsibilities For This Course




In-class contribution is a significant part of your grade and an important part of our shared learning experience. Your active participation helps me to evaluate your overall performance.
You can excel in this area if you come to class on time and contribute to the course by:




Classroom Norms


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