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Feasibility Studies - Start Your Project Off On The Right Foot!
Most
housing
feasibility studies are actually market feasibility studies, though
the term is also used interchangeably to also  describe financial
feasibility studies in addition to the market feasibility studies.
Rainmaker Marketing Corporation has provided housing feasibility studies for more than 400
projects around the country and offshore. These assignments
include housing market feasibility studies and financial feasibility
studies.
What's the
difference and how can I benefit?
A
housing market feasibility study covers just what it says - the market.
Click here and learn more about market
feasibility studies.
A
financial
feasibility study cannot be undertaken (legitimately) without
reliance upon the findings of the completed housing market feasibility
study because:
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the
expected revenue stream is defined in the market study; and
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the
expected operating occupancy of the project is defined in the market
study; and
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the
required property staffing ratios are based upon the market study
findings; and
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the
required property services and amenities are based upon the findings
of the market study.
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In short,
the financial feasibility study really can't get off the ground (other
than general "boxcar numbers") until the market study is
complete and in-hand. The ultimate purpose of the financial
feasibility study is to define the amount of equity capitalization the
proposed project will require in order for the developer to access a
non-recourse project development and construction loan. The
equity that can be raised is subject to certain considerations, namely:
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The
investment's hurdle rate - the rate of return based upon the
projected cash flows and the division of these cash flows between
the developer (on the one hand) and the syndicate investors (in the
aggregate, on the other hand). The hurdle rate is the discount
rate that will be applied to future cash flows to make the present
value of those future cash flows equal to the equity contributions.
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The
hurdle rate may fluctuate based upon the division and timing of the
division of the cash flows between the parties.
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The
division of cash flows may be based upon the equity securities
ownership rights, the rights of the holders of fractional real
estate syndication ownership interests, or a contractual mechanism
outside of these two (2) elementary approaches.
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Got
questions and concerns? Talk to a Rainmaker consultant today and get the
answers. | |
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Do
You Know The Secret?
When it comes to commercial real
estate development finance, it doesn't matter whether you need to raise
$5 million or $50 million, the out-of-pocket costs, advance fees and
project due diligence costs will always require the same relative
investment dollars the promoters have to fund. Do you know what
that amount is? Do you know the Secret? |
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