When complete, hell sell it for an immediate cash profit of $12,445 plus a note from the buyer for an additional $12,000.     Extensive documentation is required because John will need to borrow money from a bank to complete the work. With private financing its possible to complete a development project with less data.     Obviously, a developer working on more than one project may have an ongoing business independent of any particular development.     Regardless of project specifics, the developer must establish his ownership of the property or concept, back up his assumption about its projected selling price and the terms of sale and verify his estimates of the costs necessary to complete the project.     Copies of many of the documents referred to in this example have not been included because they are all imaginary. Of course, for a real project, all relevant documents should be included. In this instance, John Reynolds would surely include copies of the preliminary title report, showing him as property owner; copies of a title insurance policy, showing that the title is good; a copy of the note in favor of the Jones, showing that the balance due them is really $55,000; and copies of all bids from the subcontractors who will do the work. In addition, the bank will surely require that a written appraisal of the property be included. If the bank has experience with John Reynolds on other house rebuilding projects in the particular area, they may accept his judgment as to the amount of work needed to put the house in a condition to justify the projected selling price. If not, he may have to provide a written report from the city inspectors office, stating what work must be done to get an occupancy permit. Loan Request for Single-Family Residential Reconstruction     Telephone (312) 555-7896 Introduction     This is a request for a loan of $30,000 for the purpose of improving a single-family residence at 2246 1/2 Hamilton Street, Chicago, Illinois. This house has been condemned by the City because of faulty plumbing and wiring, and because it has been unoccupied for about three years. As a result, there is substantial work to be completed before the house can be legally and profitably sold. According to City inspectors and a private structural engineer, the house is basically sound, except for the items referred to. Specifically, the City has stated they will issue an occupancy certificate once the tagged items are completed to their satisfaction.     Upon completion, the house will have a market value of $120,000, based on comparable sales in the area. Since I have acquired the house for $60,000, the proceeds from the sale of the house will be more than enough to pay the existing note on the house and to pay back the new loan. Market Value of the House on Completion     Although I have not yet acquired a formal appraisal of the value of the house, a study of recent sales of comparable property in the area supports the value of $120,000. This area of Chicago is undergoing the "Gentrification" process whereby younger, upwardly mobile families are buying older houses and fixing them up to live in or resell. People in the market appear to be willing to pay a premium for a rebuilt house, both in terms of selling price overall and on a square foot basis. An appraisal can be obtained from any number of qualified appraisers at the lenders request.     Terms of the Expected Sale