Property development feasibility in 4 easy steps

One Minute Feaso Is The Short Cut To Understanding

Development Feasibility Study

Here’s how you can do a property development feasibility in 4 easy steps.

Step 1: Every feasibility starts with base assumptions

We know the tax rates, the currency we use, and the type of project we are trying to run our numbers on, for example, residential, commercial, or mixed-use. We want to clarify our interest calculation assumptions and set our UOM (unit of measurement) and sensitivity criteria.

Step 2: Know what you are developing

We now know if we are developing a residential, commercial, or mixed-use property development project. We know approximately how many units we are going to develop, and we make assumptions about how much it will cost to BUILD and SELL post-construction.

Step 3: Make development cost assumptions

Development costs include the cost of land acquisition, stamp duty, transfer taxes, and closing or settlement costs. And in broad strokes, all development costs are made up of soft costs (usually everything not directly related to construction, for example, consultants, development fees, commissions, etc.)
and hard costs, i.e. construction & building costs.

Step 4: Make Finance [debt] assumptions

In broad strokes, most development funding is split into two sources of finance. 1. Land acquisition finance, i.e., when you purchase your property development site. At this stage, you are still getting ready to build, but you need to purchase the site to initiate the DA (development approval) or permitting stage. This requires funding to purchase the site. And no. 2, is the construction loan, which comes in to fund the construction stage.

Step 5: Your development feasibility study is now complete

And that is all there is to it. One Minute Feaso, your quick feaso, will not tell you whether you need to spend more time investigating this project further. It gives you a detailed summary page with a sensitivity analysis that you can share with your clients, investors, project stakeholders, or associates.
Checkout the published summary page here.

Oops… Did I tell you it works on your phone

One Minute Feaso, a development feasibility tool, works on your mobile device. So while you are out and about, please feel free to work right from the palm of your hand. Do all the same feasibility calculations and make all the same development feasibility assumptions right from your phone.