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Crucial Steps On How To Assess A Property Development Feasibility
Property investors always lookout for the next best lucrative opportunity to look for innovative ways for discovering hidden gems in the Australian real estate market that promises of higher ROI. On the other hand, you could also be looking to generate rental income by bringing changes to an existing property.
Or perhaps, you might have found a potential land where you are thinking of making an investment which would attract affluent purchasers. But, whatever you do, a property development feasibility study is of utmost importance. With that being said, take a look at some of the crucial steps to make sure you build a solid plan with better projected ROI and minimum hassles along the way.
Determine the gross revenue (post-sales)
The first step will be to have a clear idea of the gross revenue of the invested property. With the present scenario of the real estate market, it is bound to take a severe hit. However, the market is set to change ...
... within the first quarter of 2021. Therefore, make sure to hold a leverage on the local real estate data and, project the cost of development beforehand. Then hold talks with the local contractors and agents to fathom the projected return.
Assess the overall cost of the project
The second most important step is to gauge the overall cost of a building project. That will come under the property development feasibility study which will take into account all the extraneous costs and even the contingency fund as well. Furthermore, you must also assess the realistic return of investment of the ongoing project by listing all the investments made. That includes –
Cost of that particular piece of land
Price of the building materials
Fees of the building contractor
Cost of hiring interior designers & architects
Associated costs, etc.
Once these are listed, it is time for you to subtract the projected cost of development. This will give you the gross income.
Consult with the property development officials
When you are considering of conducting your property development feasibility test, you are bound to come across professional team of experts who will help you in finding whether the proposed building project is feasible enough!
Feasibility studies are one of the most crucial aspects that investors need to conduct so that they have an actionable data at their disposal. It is also essential to consult with a property development firm that has experience in this industry and knows it from inside out. Only with working with an expert team can you eliminate all shortcomings and mitigate all threats!
Look for funding options
Finally, it is time to analyze all the available funding options that will help you to materialize your dream. Make sure you have enough working capital at hand before kick-starting your project. If you are falling short of liquid cash, make sure to avail funding from reputed lending institutions. You can also consider procuring advances from commercial mortgages (whichever works the best).
Lastly, building am emergency fund is of paramount importance. No matter how successful the property development feasibility study was, your dream project can come to a halt at any given instances considering the volatility of the current real estate market. Therefore, it is absolutely essential to have a backup resource to keep the project from getting stalled. Also, make sure to use the above mentioned tips and advice to figure out if an opportunity is like once in a lifetime offer or can it be passed for some better prospects in the pipeline. Remember to remain cautious at every step of the way and maintain a cordial relation with the local authorities for a speedy & hassle-free process!
About the Author: If you would like to know more about the Property Development Feasibility then please take a moment to read the contributions made Adam Leworthy.
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