Property Feasibility Analysis & Why it’s important
Assessing feasibility should be the starting point for any project including developments, land divisions and owner-occupied builds, whether a site has been identified for purchase or a site is already owned.
Good feasibility will assist brokers in understanding the project financials, accountants in advising on the taxation implications for the project and agents in understanding all available options for a site.
Your feasibility should enable you to confidently answer the following questions:
• Have I considered all of the development options available and do I understand which is the best option for my unique situation?
• Do I understand all of the costs involved for acquisition, land division, site preparation, pre-construction and construction?
• Do I know all of the holding costs involved in the project and the impact when peak debt is reached?
Furthermore, what will be the peak debt figure and can I afford to construct upon securing the approvals?
• What are all of the costs that banks are likely to lend versus the costs that will need to be raised from personal equity?
• Do I know the holding costs, tax implications and cash shortfalls that may be experienced if properties need to be held?
• What is the optimum sized dwelling/s to build to extract the best possible profits from my project?
• Who is the target market for the final properties and what is the best specification and style to secure them?
• Do I understand what the finished dwellings will be worth based on objective and validated comparable sales data?
• Do I know all of the risks involved with the project and does the site have access to all required infrastructure?
• Are there constraints on the development, such as significant trees, council assets, easements or encumbrances?
• What is the available development footprint for new dwellings after consideration of council requirements?
To summarise, a feasibility analysis is fundamental to a project’s optimum success, especially when you consider that only 22% of sites identified by clients and presented to Zybek Developments for analysis are deemed viable by Zybek Developments.
GUIDE TO RESIDENTIAL DEVELOPMENT
When developing residential property there are 4 key things you need to understand to extract the highest profits:
- Optimum build size
- Available footprint
- Target market & appropriate specification
- The costs
This document serves as a guide to help you understand these four areas to help you increase your profits when developing residential property. Remember, an experienced project manager such as Zybek Developments can guide you through this process to help you increase your profits and save your time.