Subdividing may be an enticing development strategy, but it’s not without its pitfalls. Here’s how a proper feasibility assessment can help you avoid the risks and make your investment most profitable.
Subdivision can be a very profitable property development strategy, but it’s a lengthy and costly process overall. And because executing the strategy can prove complex, not having proper preparation could lead to failure.
This is why a subdivision feasibility assessment is a crucial step to take before starting a new project.
The assessment includes local requirements, easements, restrictions, site conditions, and other vital factors. It gives you a detailed picture of the project background and makes it easier to predict the time required for the project and the expenses.
Certainly, the thought of additional expenses before you’ve even made the deal might seem less enticing. But with the detailed picture that a thorough assessment provides and the more precise financial projections, this initial cost might easily prove worth your while.
Avoiding unnecessary risks, additional spending, and even financial loss will pay off in the long run, and a feasibility assessment will help you do just that.
A detailed subdivision feasibility assessment report could help you understand the process and remove the unknowns from the equation. It will contain a plan of subdivision potential and show any risks you wouldn’t otherwise be aware of, as well as a stage-by-stage breakdown of the process.
The assessment’s usefulness is apparent and well-known to those with some experience in property development. However, newcomers might not fully understand what the assessment provides or what are the benefits.
In this article, we’ll explain the importance of feasibility assessment and show you exactly what it includes.
Why a Subdivision Feasibility Report Matters
While subdivision is quite an exciting process, it isn’t devoid of risk.
This property development strategy can also prove confusing and daunting to those with less experience in the field. This is especially true when various constraints on planning and executing the project are considered.
A subdivision feasibility assessment can help you ensure the property will be profitable before committing to the investment. Proper site investigation will provide you with vital information about the market, the condition of the site, as well as any constraints the engineers might encounter.
With the relevant data, you’ll be able to make a well-informed decision about your course of action.
If the report shows that a subdivision would be too risky, you can save the time and money by withdrawing from the project. On the other hand, if the projection is favourable, you’ll likely be safe to proceed with purchasing the property and carrying out the subdivision strategy.
With a concise feasibility report, you can take full control of your investments and projects, and your decisions will be backed up by reliable data. Also, doing a subdivision feasibility assessment beforehand will provide you with the best chances of getting a return on your investment.
What Goes Into a Feasibility Assessment?
If you’ve decided to perform a feasibility assessment, you’re likely ready to buy the property as soon as possible. But to close the deal, you’ll need to make several key preparations.
First, you need to define your budget clearly. This means determining you and your partner’s equity and borrowing capacity. And with the help of a professional adviser, you’d also be wise to consider the tax structure. This will depend on the particular circumstances of everyone involved in the project.
When you have the financial matters cleared up, you’ll need to decide on a strategy. This includes what type of development you have in mind, how many lots, and what is your location of choice.
Next, you need to examine the potential sites and determine if they present a profitable investment. It’s essential to find the property development solutions for each site since this will inform your decision on the particular investment.
You should assess risks, constraints, plot features like access, slope, and easements, and determine the financial and market situation. Crucial information in this phase includes cost estimates regarding the plot size, building, and subdivision costs.
After the relevant data has helped you decide on a site, there are detailed examinations necessary for moving forward. These will further inform you of every expense and risks that might not be apparent in the preliminary consideration.
In this phase, there are several activities that will depend on the particular site. Those include town planning advice, surveys and overlays, concept sketches, revenue estimates, preliminary engineering, and more. Based on this data, you’ll get a refined picture of the overall costs, which will be used for more accurate financial and tax projections. At this point, the feasibility forecast can be revised with more detail.
Once every detail has been accounted for, the revised final subdivision feasibility assessment report will present a comprehensible analysis of the property. This will help you understand, in detail, the expenses and risks involved, making your decision on whether to pursue the investment much more straightforward.
Assessments Can Help You Save Valuable Money and Time
A subdivision feasibility assessment can’t predict the return on your investment with absolute certainty.
However, it can provide crucial data to help you make the most well-informed decision. It’s often the case that, based on the information provided, the best course of action would be to withdraw from the deal. But the assessment would be time and money well spent compared to the potential loss that could result from going through with a less favourable deal.
To make sure that your feasibility assessment is done properly, take advantage of the powerful feasibility tools offered by Archistar. Our software platform can assist you in property development by ensuring you take on the most lucrative projects.
Schedule your demo of Archistar to see how it works and start moving your business efforts in the right direction.