One question that may come to mind is: What are the four components of a property development feasibility analysis?
The answer? Well, we will tell you. The four components of a property feasibility analysis are:
- Market attractiveness
- Financing options
- Cash requirements
- Cash flows
You know what you are getting into when it comes to leveraging your cash flows, so let us just put those two out of our minds for now. There are many uses for property development feasibility; for example, one can use it to analyse the profitability of a business or analyse the viability of a new business venture.
Why does a property analysis matter?
Given are the reasons which makes property development feasibility report so important:
- Because it helps the developer determine what they can afford to build and where they can build it
- It gives the developer a realistic idea of what the market will support
- It gives the developer an idea of what other properties in that neighbourhood are currently selling for
- It helps the developer understand how much it will cost to build
Let us take a look at other components of a property feasibilityanalysis.
- Property-specifics:
We need to understand the most accurate and precise location of the property in question.
- Property-related variables:
We need to understand the current and anticipated value of the property, as well as the economic impact of any improvements that may need to be made.
- Demographic factors:
We need to understand the age, race, income, and employment status of anyone who resides in or frequents the surrounding area.