If you were starting a new business, you would start with a business plan so why should property development be any different? Undertaking a development requires lots of strategic planning long before a slab is poured. Calculating the numbers and analysing market conditions can ensure that you have a clear vision of how valuable your development can be as well as clearly identify any pitfalls and mistakes before they happen.
If you’re new to the development world, there are many, many variables at play. Where to buy, what to build, how to market.. the list goes on. Once you start considering all the variables it can be quite overwhelming so how do you make the right decision?
Answer: A comprehensive feasibility study
A comprehensive feasibility study provides you with the confidence you need to begin your construction work with accuracy and focus as well as a determination of whether your project will be a success (profitable) or a failure (a loss). Therefore, with a good feasibility study, you can reduce your risk of losing money significantly because you’ll have the insight and foresight. Property development is a serious business and whilst it’s a potential stepping stone to financial freedom, it also has potential to be financially ruinous if you are not careful and diligent.
What does a feasibility study include?
The key goal of a feasibility study is to determine if your project is actually going to work. Is it feasible!?
By understanding your budget, you’ll determine if you can afford to develop your project or if you require outside investment. We’ll look at all the costs involved as well as the possible revenues generated from the sale of your property assets after they’re completed. When you have all this information, you can clearly see if this is a project that’s going to be a success or a failure.
The report also highlights potential issues, which is especially important for property developers.
It will help you to understand whether your proposed development meets all relevant zoning laws. Plus, it will show you factors that could delay the project, such as local sentiment and land-based problems.
It will either boost your confidence ahead of you dedicating your time and resources to the project. Or, it will show you that there are so many issues that you need to drop the project and move onto something else.
The first step
The key with a feasibility study is that you don’t leave it until the last minute. Yes, that means you absolutely need to have conducted this study prior to purchasing a property! With that said, a feasibility study is one of the first steps in a long journey to a successful development project.
Here at North Point Property Group, we’re experienced project managers that are here to guide you through the wonderful world of property development. If you’re ready to start developing and need some experience in your corner, then give us a call today on 0403 359 733.