Typical Due Diligance Steps

[alexm]

Hi all,

What typical steps do the more professional investors/developers undertake when researching a project (e.g. feasibility analysis)? What metrics/kpi's are used as part of the evaluation process?

I'm sure many people may have this same question and would like to learn how professionals perform research for their projects.

Thanks
Al

 

[Michael Kelly]

To assess the feasibility of a project you will first need a basic design sketch drawn up (not a full set of working drawings but just a simple site plan, floor plans and elevations) With these you can get quotes from a few builders to assess the construction costs, check for any issues with the local council or even better yet submit a planning assessment and get a rough property valuation done or at least speak a few local realestate agents about what sort of price they think the finished product would be worth.

You will then be able to figure out roughly how much profit you should be able to make. I'm not a professional investor but have worked with a few before on small unit sites. Hopefully someone else might be able to expand on metrics or kpi's a bit more..

 

[A Jeremy]

Hi alexm,

Usually I begin by looking at the zoning of a prospective block and looking at the possible land uses in the relevant planning scheme.

Once I know what I can build I choose the most most profitable project to undertake a feaso on and if more than one option seems viable then I will complete a feaso on each.

My process means drawing up a scale site plan and using floorplans from the builder(s) that I am likely to use. During this stage I ensure that all of the planning scheme requirements can be met i.e. refuse storage, room orientation, parking, turning circles, private open spaces etc.

With this information I can then feed all of the numbers into my feaso spreadsheet and calculate the profitability of the(each) project and see if one or more projects are viable and which one has the biggest profit margin.