You found the site. You ran the numbers. The feasibility says there is a healthy profit in it. Then you take it to the bank, and the answer is no. If that has ever happened to you, you have run into one of the most misunderstood truths in property development: your feasibility and your financier’s feasibility are two very different things.
Two feasibilities, two very different questions
When you run a feasibility, you are answering one question: how much will I make? You weigh the end value against the land, the build, the soft costs and the holding costs, and look for a margin that makes the risk worth it.
Your financier runs a feasibility too, but they are answering a completely different question: if this project goes wrong, do we still get our money back? They are not interested in your best case. They are interested in the downside.
Profitable is not the same as viable
This is the trap. A deal can be genuinely profitable on paper and still be knocked back, because profitable and viable are not the same thing. As we discuss in the podcast episode The Feasibility Lies Developers Tell Themselves (Ep 241), plenty of deals that make money on a spreadsheet never get funded, because the numbers only stack up when everything goes right.
Where the two feasibilities part ways
The gap usually shows up in a few predictable places.
Sale prices. You might price your finished product on where the market could be in eighteen months. The bank valuer prices it on what it is worth today, and as we cover in the episode, they will tear an optimistic sale price apart.
Contingency. You might run a lean contingency to make the deal look sharper. A financier wants a fatter buffer, because they have seen what happens when a build blows out.
Presales and serviceability. A lender may want presales locked in and proof you can service the debt if the project stalls. Your feasibility rarely stress tests any of that.
Costs. Where you estimate, a financier often leans on a quantity surveyor’s numbers, which tend to be more conservative than a developer’s.
Run both feasibilities before you buy, not after
The developers who get funded are not the ones with the rosiest spreadsheet. They are the ones who run their own numbers and then look at the same deal through the bank’s eyes before they commit. If it only works on your assumptions and falls over on the conservative ones, that is not a financing problem you discover at the bank. It is a deal problem you can catch early.
For the full breakdown, listen to Ep 241, The Feasibility Lies Developers Tell Themselves, and its companion episode Ep 243, Why Financiers Can Say No To Property Developers. Between them, Bob and Hilary unpack exactly how the bank sees your deal, and how to get on the right side of that conversation.
If you want a hand pressure testing your own numbers, book a call with our team and we will talk it through.
General education only, not financial, legal or tax advice.