Welcome to Property Development System, financial feasibility. Guys, before I forget, if you haven’t already, make sure you check out my FREE course in property development on YouTube & while you are there, don’t forget to subscribe.
We’ve got financial feasibility. Before I actually go ahead and explain to you what exactly is involved in financial feasibility or I show you an application that I use for financial feasibility … for conducting financial feasibility on property development projects, let me first explain to you a concept. It’s a very important concept, and it’s the underlying basis of all property development feasibility studies. Make sure you watch this next video carefully, and don’t forget to leave your comments. I’ll read all of them. If you’ve got any queries or anything, leave your queries in the comments and I’ll try and answer them. Let’s watch the video.
Let’s say, if you were to do a detailed financial feasibility analysis, what are the different costs that would be included in your financial feasibility? Let’s look at land acquisition cost. You have your purchase price, legal stamp duty, buyers, agents commission. There are other acquisition costs like legal settlement, searches, transfer, discharge of mortgage, mortgage registration fee, pre-purchase inspections, due diligence, bars agents commissions, sorry that’s a repeat, structure setup and responding fee. If somebody else formed a deal for you, you’ll have to pay them responding fee. All these things will become part of your land acquisition costs.
Under finance you’ll have brokerage fee. I’m telling you all of these things because even if you can do a quick two minute fizzle, and understand whether or not a deal stacks up and then move on quickly to another deal and then another deal, you still need to understand what a detailed financial feasibility includes. Under finance you’ll brokerage establishment, evaluation interest fee, basically the interest rate, annual fee, and different kind of admin fees.
All the different drawings and the different professionals will make a feature survey, reestablishment surveys, architectural drawings. Now there is going to be two different fees from the architect, one for the planning stage or the DA stage, and one for the working and drawing stage or the building approval stage. You’ll have civil drawings, electrical drawings, hydraulic joinery landscape, mechanical and structural engineers of lands, where project management, development management, specifications and materials board, plan of subdivision documentation, town planning. If you at this stage do not understand what these are, don’t worry about them, because I cover them in a lot more detail in my Property Development System.
All different kinds of reports would be average reports, asbestos, building surveyors, CHMB, which is the Cultural Heritage Management Plan, very common in Victoria, especially if your block of land is actually close to a water body. I’ll explain that more in another video. We’ve got energy report, environmental audit, soil report, allowance, condition surveyor report, cross plants and estimates, electrical pole relocation. You need to report that. This is more for the builder, but because I’ve got a construction company as well, I’ve quoted in my feasibility so that I can account for it.
Domestic demolition permit, BCC planning application, well this is the Council Planning Application, it shouldn’t be here. Then we’ve got material and finishes board again, fire levy. If you’re in Queensland, you’ll have a QUU order fees. You’ll have building costs, external costs, civil costs, if you’re doing land subdivision. Council contribution charges, would have your service connection fees for electricity, gas and water, telephone, path and contributions, council contribution, like number of buildings divided by land as a percentage. Sewer and water contribution, and PIC number which stands for Plumbing Industry Commission Number in Victoria.
In different land holding costs, you’ll have land tax, council rates, water rates, property management fees, insurance and so on. Selling costs again you’ll have your agent’s commission fees, 3D artist impressions, advertising brochures, websites. If you want to do a branding, legals for contract of sales, owner’s corporation and photography. You might need to take photos of what you’re selling. Under miscellaneous we’ve got building insurance, lawn mowing, account commercial evaluation, bank fees, house removals.
Now why do I have this here? I have this here because you can actually use these things as a checklist, especially when you’re doing your detailed financial feasibility. However, this video is actually not for detailed financial feasibility, but I wanted to show you what’s actually involved in a detailed financial feasibility. Let’s look at a detailed financial feasibility application that I have developed. If you’re part of the Property Development System or you’ve invested in Property Development System, you actually get a two-year license of this software for free. For this video, it’s only to get an understanding of what it actually covers.
It’s got a project planning sheet where you plan your project, and basically you allocate what kind of time period, what kind of expenses will occur. Based on that planning, you actually come in and you start putting in the details. You select their GSC. This side of the application is all about allocating cash flows based on the different periods where those costs will occur. Don’t let this thing scare you, because it is not scary at all. I explain this application in over nine different videos step-by-step, so you can understand it really clearly especially if you invested in Property Development System.
This application actually comes pre-populated with the professional fees. The basic difference between a two-second application, or a two-minute feasibility and a detailed feasibility is that the detailed feasibility will be number one, there will be a lot more detail. It will also include cash flows and all different kinds of financing needs. Then there’s going to be a full cash flow and-
Thanks for watching the video. All links are actually in the description. If you would like to download a free resource, which is a free Property Development blueprint, you can do so from my website by clicking on free blueprint, and you should be able to do everything. I’ll see you next time.
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