Property development feasibility is an in-depth study that helps property developers better understand whether to go ahead with a development project and how to do so. Feasibility studies are a multifaceted, objective process whereby risk and reward are weighed up, with a view to potential pitfalls and opportunities to maximise profit. Feasibility studies are not only based on financial reports and estimates but ultimately, it’s the dollars and cents which will inform a property developer’s final decision to continue with the project or not. The best way to calculate your feasibility is by using a property development feasibility calculator.
What Costs Contribute to Property Feasibility?
There are some standard costs that are likely to apply to many property development projects, but it’s important to remember that each development has its own particulars. The type of property you are developing will significantly affect your feasibility study. Hence, it’s essential to ask your architects, builders, lawyers, bankers, marketers, estate agents, and accountants if there are any costs you may have left out of your feasibility study.
Costs to consider in your feasibility study:
- The purchase price of your property
- Conveyancing fees
- Stamp of duty, which is applied on a sliding scale
- Council rates
- Settling current leases
- Settling any outstanding debt
- Land surveying fees
- Town planning drawings
- Interior drawings
- Working drawings
- Interior design
- A plan of subdivision
- Building insurance
- Planning permit
- Compliance certificates
- Rezoning application
Sales and marketing
- Professional renders for off-plan marketing
- Printed brochures
- Online advertising such as social media and advertorials
- Advertising costs for real estate portals
- Sales costs such as agent commission
- Cost estimate by the builder
- Contingency fee
- Bank interest on loans
How Does a Feasibility Calculator Work?
A property development feasibility calculator speeds up the number-crunching process typically associated with feasibility calculations. A property developer will calculate the feasibility of various sites and opportunities manually to compare different potential projects. Without these calculations, it is impossible to make an informed decision. Using a feasibility calculator, you can quickly work out how to maximise your investment.
What Does a Property Development Feasibility Calculator Work Out?
There are many property development feasibility calculators to choose from, all with slightly different features. Still, the most critical information you will glean from this handy little tool is how profitable your project will be. Your profitability is based on a wide range of variables, but a feasibility calculator will take the most basic information to calculate your feasibility.
Information a feasibility calculator usually requires:
- Site purchase price
- Acquisition costs such as stamp of duty and conveyancing
- Development costs
- Consultants costs
- Development and sales periods
- Interest on loans
- Projected price of the finished property
- Sales costs
Based on just this little bit of information, you can figure out quickly whether your project is feasible. With the help of Archistar’s feasibility features you can quickly find out whether your proposed project is compliant, and you can start to see how profitable–and thus viable–your project will be.