The True Meaning of Feasibility
Looking to make some money as a developer?
You’ve probably heard the term feasibility study and know it’s got something to do with working out how much profit you could make.
But do you know exactly what the feasibility experts look at when they’re putting together their report? Or that it’s pretty well the first step you should take if you want to turn a parcel of land into a tidy profit?
How much buyers might pay for the homes you build is just one side of the equation. It’s also critical to take a long, hard look at what you will have to spend to build those homes.
But what if there’s more than one way of doing things? What if single-storey works better than double? What about apartments rather than villas? Or what if less is more?
All too often, would-be developers walk away from what could be a good site because they’ve been told four standard homes are the way to - and four standard homes just aren’t going to deliver the profit they need.
At Dale’s we offer a two-step feasibility study, complete with a cost analysis, modelled options and invaluable insights into what local buyers are looking for.
Step 1 is the feasibility review. It costs you nothing and gives you a great starting point. We’ll take a look at your plans and provide a number of options, giving you an estimate of the project costs so you know what each of your new properties would have to sell for if you want to make a solid profit.
If the numbers look as if they’ll stack up, the next step would be to undertake a full feasibility study. For a small fee dependant upon your development we’ll examine each and every aspect of your proposed project.
This way, or that way?
Setting your projected profit at your desired level, we’ll model each of the options to identify which one has the potential to make you the most money. We’ll even put you in touch with local real estate agents to gain insights into what sort of properties might appeal to potential buyers.
It’s the sort of invaluable information that can lead to moneymaking developments that are also easy to sell, as the developer who tackled two projects in Palmyra discovered.
Take 1: After purchasing a block zoned R50 on Waddell Street, the developer maximised the site’s potential by building six two-storey homes, each one sitting on 200sqm. To appeal to couples and young families, all the sleeping quarters were upstairs. But the developer had misjudged the target market and their properties took longer to sell than expected, leading to higher holding costs. All six units did sell, however, and the developer walked away with a 16% profit.
Take 2: The developer then purchased a block the same size and zoning next door to their first development, but this time he completed a feasibility study and spent time talking to local real estate agents. Having identified strong demand for single-storey homes, the developer built a four-unit development appealing to downsizers. Nailing the target market this time, they sold all four properties quickly and made a healthy 37% profit.
As you can see, a feasibility study is about more than just the numbers. But, don’t get us wrong. The numbers matter, too. It’s why we’ll model each of your options so you can compare projected returns and make informed decisions.
What else is covered?
- Breakdown of development costs, including strata fees, demolition fees, site costs, retaining and the cost of power, water and fibre-ready connections.
- Quote to build each unit, detailing what you’ll spend on everything from the water heaters to the toilets, taps, even the kitchen sink.
- Detailed specification listing products, materials and fixtures.
- Itemised costs for optional items such as internal wall painting and air-conditioning.
- Calculations to meet requirements for open space.
- Letter of Quote to carry out the work so you can strike while the iron’s hot.
Think of a Dale’s feasibility study as the difference between going to your GP and seeking out the advice of a specialist. Not only will it give you a plan of attack, but the right design, the right research and the right advice can also have a huge impact when it comes to obtaining finance for your project.
If you want to talk more about your development or just bounce some ideas around with property development experts, call us on (08) 6555 7557 or click here.