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 SideWithout 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 IncomeBecause 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:o Architect’s inspection of the entire project.o Architect preparing a Defects List.o Builder calling back subcontractors to correct defects.o Architect’s final inspection.o Architect issues Completion Certificateo 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.o Preparation of the Final Unit Plan (as used by conveyance office) for settlement.o Lodgment of the Unit Plan with the Titles Office.o 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 PlanIt 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.

Why Mixed Use Development Is a Positive Real Estate Phenomenon

A mixed use development is any real estate project – be it an integrated township or a single building – that combines residential, commercial, industrial, and retail sectors. Mixed use developments give us the chance to create an integrated space wherein its residents are able to gain access to anything they want within the comfort of their living zone. It also offers real estate developers the chance to venture beyond traditional building norms, and create a unique environment for people to live in.Since mixed use developments provide every convenience like residences, shopping malls, offices, and other amenities in a single location, it is being preferred by more and more people every day. It is also a great option for home buyers, allowing them to stay close to their workplace. It saves them a lot of time that would’ve otherwise been spent on travel.Realizing people’s need for self-sufficient townships, the real estate domain has also taken to these projects, as it enjoys a growing demand in the market and yields better profits. The reason why mixed use development is a positive phenomenon in real estate is because it is beneficial to both developers and buyers. For developers, it has the benefit of including all sectors of real estate like residential, commercial and retail. This gives them an opportunity to explore and offer consumers the best of all sectors in one place. This also distributes the risks and reduces them considerably.From a buyer’s point of view, mixed use developments work out well not just for living, but even as an investment. This is due to the fact that the commercial and residential spaces in such environments are dependent on each other. In a mixed use development, the residents become the primary client base for the commercial and retail sector. In contrast, the presence of good retail and commercial spaces is an inviting factor for residents. This practically guarantees an investment-friendly atmosphere for both buyers and developers.Another major reason why mixed use developments are a positive real estate phenomenon, is that they are a great option for both developed and upcoming areas. Since these developments are mostly self-sufficient, they do not depend heavily on the city or locality’s social and commercial infrastructure. While there can be no denying that the developments in cities with superior infrastructure yield more gains, they also help bring up the economic and social growth of upcoming localities. Hence, it’s really a win-win situation for real estate developers.In view of all these advantages, one would have to say that mixed use developments are definitely a positive trend in real estate and will continue to gain popularity, simply because it makes life much easier for its residents.