Assessing your development’s feasibility
Before you even begin undertaking a property development project there is so much preparation and groundwork to be done. From the process of obtaining finance, identifying and securing the ideal site, to sourcing the appropriate team of professionals. However, one of the most significant undertakings prior to undertaking property development is the feasibility study. In this instalment we will be assessing your development’s feasibility and whether or not to pursue it.
The importance of a feasibility study
Prior to undertaking any property development project, it is essential to carefully consider and weigh all the benefits and drawbacks. Moreover, you have to look at the numbers under a microscope and scrutinise the viability of the project. This will ensure that you can devise a course of action that will ensure that you make a profit. The feasibility study is vital as it will help you assess if your proposed project will be a success or failure.
A well carried out and thorough feasibility study will bring to the fore any potential risks, problems, and pitfalls you may face along the way. These issues can essentially make or break the entire project. Some of the issues include; the appropriateness of the site, the type of structure you can erect on the site, and planning approval. In addition, the feasibility study will aid you to calculate the projected costs and the size of the profit margin you can expect.
Carrying out a feasibility study
In essence, ensuring your project is viable entails conducting a series of feasibility studies. A good place to start is to carry out a study of the potential development site. This will involve assessing the appropriateness of the location, and the type of structure you can put up on the site. Simply put, this stage involves checking all aspects of the site to ensure a successful outcome. You will also need to draw up a preliminary set of figures to assess whether the project is worth pursuing to the next level. In a nutshell, the series of feasibility studies are designed to assess all aspects of the development to ensure a successful outcome. Regardless of the stage of the feasibility study, you are at, your findings should be sufficiently accurate. Keep in mind that any mistakes at any stage could potentially throw out all the entire development project.
Due diligence feasibility research
Exploring the best use of the site is the next step after identifying a suitable site. One of the key things to explore relates to what you can do with the land. Moreover, it is essential to explore the actual kind of structure you can build on the site. In addition, carefully investigate if the property has improvement potential and how you can make a profit from it. Valuable information can be acquired from your local council. Some of the information you want to have includes the type of permitted development based on the property’s zoning. It is also important to know the site coverage that is possible. The next step after you know what you can build on the site is examining the possible end value of the completed project.
One of the most important considerations for any property developer is undertaking a project that satisfies buyer and tenant demand. Moreover, evaluate whether the development will appeal to the right market and sit in the ideal price range. It is paramount that you have a full appreciation of the type of services and amenities that appeal to buyers the most. Also, have a profound appreciation of the type of people who aspire to live there. Consultations with local real estate agents are crucial at this stage. These will help you get insight into estimates of what the development will sell for. Moreover, real estate agents will aid you to know whether there is sufficient profit to be gained.
Development feasibility study
It is essential to undertake the correct type of research. It is also crucial to include any contingencies in your feasibility to allow for any issues that may arise during the project. Undertaking the correct research into a proposed development is a crucial step that will have a profound impact on all other elements of your development. Ensure that you conduct a development study with all the facts and figures. After all, you want to have all the relevant information to help you decide whether to proceed or walk away from.