| |
| |
|
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:
Real-Estate - Google News |
|
|
|
RELATED ARTICLES
Dont Sell Your House--Ever! Keeping your existing house when you buy a new one could be THE most profitable financial decision you could make. Consider the following:1. Thinking About Selling Your Home? Owning a home is the original American dream. It's the old frontier spirit, wanting to claim your own tuft of the New World. Selling Your House - $100,000 Pets Is your pet worth $100,000? It may be if you don't make accommodations for it when selling your home.A Hundred Thousand Dollar Pet?A house I'd seen with a potential buyer in an attractive neighborhood built around two lakes sold for $100,000 less than was typical for the neighborhood. Termite and Moisture Damage Not Reported I have done so many appraisals where I saw obvious damage that was not reported by the other inspectors. The first couple of times I thought it was just carelessness. Buying Property in Spain You have made the decision to move to Spain and are now looking for a property to buy? Where do you start? Firstly, I would suggest you go on to the internet and look at the various agents that are offering properties for sale in Spain. Many of these companies are run by people who have already emigrated to Spain and will know the many problems and pitfalls that arise when buying a property in Spain. I Believe God Wants Me To Tell All In Real Estate After years of experience in the real estate industry I felt that God wanted me to write about everything in real estate. There were young people that were not being protected by anyone, including buyer's agents. 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. 8 Essential Questions to Ask Your Home Inspector Congratulations! You've decided to purchase a home. We all know that when purchasing a home, every detail is an important one. How Not To Blow Your Build Budget Most people who complete a self build will go on to make a profit if they decide to sell afterwards, but what steps can you take to ensure that you don't totally blow the budget?There are lots of advantages to a totally unique self-build but most important is sound financial planning before and during the self-build, to ensure you stay within budget and make worthwhile savings.Research all your costs carefully and get as many perspectives and quotes as possible. The Real Estate Cycle The real estate cycle, like the business cycle, refers to the activity of the real estate market as it reacts to the forces of supply and demand.Supply and demand. How to Find and Buy a Bargain House with Little or No-Money Down Real estate investors know how to make money buying distressed houses. Investors recognize that bargain houses offer the best way to make a return quickly. Refinance Rental Property - Dont Sell It You own a rental property for years, and never see the "big pay-off." Is it time to cash in on your investment, now that you've paid down the mortgage, and values are up? Maybe not. Real Estate: Financial Considerations $$$ Raw land as opposed to improved property is much more difficult to finance through traditional lenders. The main reasons are that it generates very little income, development costs can be expensive, there are no buildings or improvements that can be used as collateral, and it is often considered speculative. A Crash Course On The Payout Options Available To You When Selling A Mortgage Note Okay, let's take a look at the typical payout options:Full Purchase - The investor buys the entire note. This alleviates the seller of the responsibility to collect payments in the future. Understanding the Escrow (Closing) Process 1. What is an escrow?Escrow is defined as a process where parties deposit instructions and funds with a "disinterested" third party until conditions of the instructions are met. Real Estate Web Design - 3 Items You Must Include on Your Site Real estate web design requires you to do things a little bit differently because you are selling either your services or actual homes, so there must be several things present on the web page to make it user friendly. Unfortunately, many real estate web sites are poorly designed, ask visitors to supply tons of personal information before being able to view any information, don't provide enough information not to mention photos, and are all around a pain for many visitors. Quality of Life in Sussex County Delaware. Facts, Statistics, Observations and even opinions! We Sussex Countians are fortunate in many ways as we have a wonderful quality of life here.Climate: Our climate for one thing is the best in the region. Why A Final Inspection Is Necessary In the sales contract, the sellers of your new home agreed to leave all the light fixtures, custom blinds, and refrigerator. When you walk in the home on moving day, to your surprise, all of those things are gone. FSBO: For Sale By Owners Chapter IV [part 1] Like a monarch, Red Haring reigned in the deep leather seat of his KenWorth cab-with its king-size sleeper. The 400 horsepower Caterpillar diesel engine droned apathetically as Red downshifted for the parking lot to his favorite Boise, Idaho roadside diner. Selling by Owner Tips Do strangers scare or intimidate you? If you're planning to try to sell your home yourself, you'll have to get used to it. You'll also be opening yourself up to potentially dangerous situations and legal liabilities.
|
 Home  Contact
|
| Real Estate Information © 2006 |
