Real Estate Information

Real Estate Development Feasibility Study (Income) - $1.2 Billion Developer Tells You How To Do One


There are two sides to a feasibility study and in an earlier article I discussed the cost side of the format and:

Now Let's Discuss The Income Side

Without the Sales Income, All You've Done Is Spend Money, And Anyone Can Do That.

So that we are clear in what I am going to define for you, let me say that there are two forms of Income.

We shall be dealing with Sales Income, in this article, which in our case will consist of large amounts of money being received as a developer in exchange for the property units we have created.

The other form of income in a feasibility study, is Rental Income and will be addressed at another time when I write an E-book on Commercial Development.

Sales Income

Because of the make up of our feasibility study sheet, there will be no deductions from out Gross Sales Income, because we have allowed for those costs on the Cost Side of our feasibility study.

Items such as sales commissions for sales agents and various marketing costs have already been allowed for previously.

Now I have seen some formats of feasibility study, which deducts marketing costs from the Gross Sales Income to produce a Net Sales Income.

It achieves nothing - "all costs are costs" and they should be put on the cost side of the feasibility study, which is what I do and have always done.

When Can You Get Your Hands On The Sales Income.

Getting the sales income into your account is very important, yet many people never ask the question as to what the procedure is "exactly" in their neck of the woods.

Get to your Conveyance Expert and have them give you a schedule of events "with an estimate of time for each stage."

This information is important in preparing your cash flow feasibility study format, as it results in reducing your interest cost.

So by knowing this information at the beginning of a development investigation, you are adding a little bit of "certainty" to the early stages of your feasibility study.

Let me give you an example:

At the end of the construction phase the builder moves off site, there are a whole range of things that have to occur, any or all of which can delay, settlement taking place and so delay you getting the Sales Income.

Some of these things are:

? Architect's inspection of the entire project.

? Architect preparing a Defects List.

? Builder calling back subcontractors to correct defects.

? Architect's final inspection.

? Architect issues Completion Certificate

? Surveyor (engineers in some countries) does final measurement of the individual residential accommodation units and compares to Unit Plan that is included in the Sales Contract.

? Preparation of the Final Unit Plan (as used by conveyance office) for settlement.

? Lodgment of the Unit Plan with the Titles Office.

? Registered Title Issued by the Titles Office.

Can you see that any delay in these items will impact on the settlement date and also on your interest calculation in your feasibility study?

Body Corporate / Management Plan

It is hard to keep up with all the different names that are used around the world for the Legal Entity that runs the complex of units you have developed, however your legal advisor will let you know.

Just as out Towns, Cities and States need Rules & Regulations for all its citizens to live in harmony, so too does a small complex of units, condos, apartment etc.

What ever it is called in your part of the world, is necessary for you to engage a legal advisor to prepare one for you, which will include the preparation of a Budget to which you, as the developer, will have to pay in a certain amount of money.

The reason I am giving this brief explanation on Body Corporate / Management Plans is because at Settlement you will get back some of the money you put in to get the Budget off the ground.

In addition you will have paid the Local Council, Utility etc other amounts of money that cover a set period of time. Once again you will get some of this money back at Settlement. They are generally referred to as "Adjustments at Settlement" and act as a reduction on the cost side of your feasibility study.

So What's Next?

Remember I told you earlier about the Unit Plan that was lodged with the Titles Office, well has it issued yet? Phew - we just got it today - great!

Now your conveyance expert has to let the Buyers' representative know in writing that you are ready to settle.

In addition the buyers have to let their individual Finance Lenders know to have the Mortgage Documents completed on time and finally a date has to be agreed on which all these differing parties can meet and settle.

Now I don't want you to be concerned about all this stuff, but I do want you to know about it, so that you can understand and manage (yourself) and others who have to do all this work for you. Blowing your Top (blood pressure up) achieves nothing.

But understanding, on your part, achieves a great deal. Blowing your top, when you haven't taken the trouble to find out, makes you look foolish and unprofessional, to the professionals you have engaged to do the work for you.

So Do I Get The Money Now Or Is There More Colm?

Well, the Lender Gets the money actually - yep, the lender gets his Capital Debt and Interest paid off first. And when there is no debt, all the rest is yours. That is, your equity is returned to your account and that lovely Profit, you worked so hard to get.

Author & $1.2 Billion Developer, Colm Dillon, Has Written The Best Selling 'How-To' E-book, "Residential Development Made Easy," With Readers In All States Of The USA, Canada, Australia, New Zealand, UK, Ireland and 79 Other Countries.

His Independent Web Site is: http://www.realestatedevelopmentcoach.com/ez


MORE RESOURCES:
This RSS feed URL is deprecated, please update. New URLs can be found in the footers at https://news.google.com/news


Forbes

Productivity And Perspective: How Top Real Estate Agents Manage Their Time
Forbes
What's the number one way to crush it in real estate? Build a scalable business. Utilize a system that helps you manage a large number of contacts without dropping the ball — that's your CRM. Optimize platforms that allow you to generate leads without ...



Bloomberg

Bain to Manage Harvard Endowment's $3.4 Billion of Real Estate ...
Bloomberg
Bain Capital agreed to manage Harvard University's $3.4 billion in direct real estate investments and hire 22 people who oversaw the portfolio at the Ivy League school endowment.
Harvard Endowment's Real Estate Team Moves to Bain CapitalInstitutional Investor
Harvard to Outsource Real Estate Investment to Bain CapitalU.S. News & World Report
Bain Capital Establishes Real Estate Business | Business WireBusiness Wire (press release)

all 6 news articles »


Seeking Alpha

Real Estate - 5 Fab Signals For Housing
Seeking Alpha
Builder confidence, housing starts, residential construction spending, new home sales, and hiring in the construction industry all bode well. This data reflects healthy and improving economic growth and employment, which should continue in 2018. Five ...



Nextdoor partners with Tribus on real estate listing and lead integration
Inman.com
Real estate tech provider Tribus is partnering with neighborhood-based social networking site Nextdoor to allow for direct listing and lead integration between the two platforms, according to an announcement tweeted out by Tribus on Thursday. You can ...



Real-estate transactions: Dec. 15, 2017
Peoria Journal Star
1617 W. Country Oaks Court, Dunlap, Michael J. and Natalie R. Jensen and Morreale Real Estate Services Inc. to Celis J. and Analezi Barrera, $140,000. 1208 E. Brookview Court, Peoria, Amogh A. and Archana Deo to Joshua K. Hofer, $142,000. 2401 W ...



Russian conglomerate Sistema's real estate unit shelves bond sale
Reuters
Lider Invest, a real estate unitof Russian business conglomerate Sistema, saidon Friday it had postponed indefinitely a planned bond sale,citing an unfavourable environment.

and more »


Sierra Star

Two receive top honors in Mountain Area real estate community
Sierra Star
Each year the Yosemite Gateway branch of the Fresno Association of Realtors honor a realtor and an affiliate for their outstanding service to the community and real estate industry in the Mountain Area. Yosemite Gateway Association of Realtors annually ...



60629 ZIP code real estate and housing profile - Bankrate.com
Bankrate.com
Here's what you need to know about home prices, mortgage rates and other factors when considering buying a home in the 60629 ZIP code in Chicago, Illinois.

and more »


Two arrested for real estate fraud
The Hindu
The Ernakulam North Police on Friday arrested two persons on the charge of duping a person from Vaduthala of ₹10 lakh. Sajukumar, 49, and Robin George, 43, residents of Elamakkara, were arrested by the police for allegedly promising to sell a house and ...

and more »


Sioux City Journal

Mr. Goodfellow: Salem Real Estate
Sioux City Journal
Salem Real Estate staff are shown Nov. 29 at the Sioux City commercial real estate firm's offices: Seated, Karla Hertz and Dick Salem and standing, from left, Judy Hegstrom, Mary Wilkens and Joan Roeder. Salem Real Estate has donated to the Journal's ...


Google News

home | site map | Blog |
Portland Oregon Real Estate Listings | real estate investing | real estate in greece | for sale by owner in atlanta | House for sale: Louisville KY
Exchange Links Here | Links page |
© 2006