If there is one skill that separates developers who build wealth from those who lose money, it is the feasibility. A financial feasibility is simply the maths that tells you whether a site is worth pursuing, and it is the tool every decision on a project should trace back to.
What a feasibility actually is
A feasibility brings together every cost and every revenue on a project and tells you what is left over. Get the inputs right and it becomes your compass: what you can pay for the land, what you can spend on the build, and whether the deal is worth doing at all.
The inputs that matter
A sound feasibility accounts for the land, construction costs, consultant and approval fees, finance and holding costs, GST, selling costs, and a realistic contingency. Leave one of these out, or guess it, and the whole picture tilts. The discipline is in being honest with every line.
Return on cost: the number to watch
The figure that ties it all together is your return on cost, what the project returns relative to what it costs to deliver. This is the number that tells you whether a site is a marginal deal or a strong one, and it is the number lenders and partners will focus on too.
Run it before you buy, not after
The biggest feasibility mistake is doing it back to front, buying a site and then hoping the numbers work. Done properly, the feasibility comes first and sets the maximum you can pay for the land. That single habit prevents most overpaying.
Common feasibility traps
Watch for optimistic end values, underestimated build costs, forgotten holding costs, and a contingency that is too thin. And remember the see-saw: if you escalate your costs, you must revisit your sale prices too, or you fool yourself into walking away from a good deal.
Related reading: How Much Money Do You Actually Need to Start Property Development?
Listen to the full episode
We covered this in episode 189 of the Property Mastermind Podcast. Listen here.
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