What is a Feasibility plan in property?Every property project begins with one idea. And the first step in manifesting an idea is to assess the feasibility of this idea. If I was to come up with an idea for a new type of bicycle I could allow myself a moment to congratulate my own ingenuity. However, I would be a fool to just start blindly building the bicycle or paying others to build it for me. The wise person sits down and assesses the feasibility of such a venture on paper. Paper is cheap and you can sketch out your idea from all angles, you can create a list of all the materials you would need, you can calculate the cost to build your idea and you can estimate how much your product could sell for. If your idea cost more than the average customer could be expected to pay for it then maybe this idea is not feasible.
Similarly in property if a person sees an abandoned carpark and envisages a small block of apartments they too need to check the feasibility. They must sit down and research the cost of buying the carpark, the cost of constructing the apartments and then of course calculating how much the apartments would sell for. If this first feasibility plan does not generate a likely profit of 30% or more then its probably best to abandon the idea. If the idea does make sense on paper then you can move onto the next stage which is another feasibility study but this time in even greater detail. If this more detailed feasibility study still suggests a healthy profit then you can start to develop a full business plan and start the ball rolling
This is one of the things that we cover in the property development course. In order to create a feasibility plan you must answer the following questions:
This can be found out by ringing the seller or their representative – this is usually an estate agent, realtor or Lawyer.
This can be found out by talking to an Architect or to the local regulatory authority – i.e. the planning department.
This can be found out by hiring a quantity surveyor. Quantity surveyors are experts in Construction costs.
You can look at the sold prices of similar local properties in the area and take an average.