What's the best way to study a real estate project?

Always consider the 5 fundamentals of property development: 1. Site acquisition 2. Feasibility studies 3. Authority approvals 4. Revenue creation and 5. Delivery "Property development is a learnt skill; you're not born with it." @PropertyDevelopmentInstitute utilises the 5 fundamentals of property development in all their award winning training courses. When you master the fundamentals your capacity for resolving risk issues is enhanced. Education is the answer to every "How do I..." question.

Depending on the permissible usage and constructed area of a real estate project, we need to first conduct a thorough feasibility analysis. This analysis covers the demand supply gaps along-with phased pricing and helps the developer/ investor achieve their break even period. It also clarifies the internal rate of return that can be made in short and long term.

Always know the zoning, permittable use, variances and other factors that could impact the project prior. Simple due diligence. Discussing with your broker and architect is a great place to start!

Each project will vary according to both macro and micro markets that will effect short, medium and long term. Always focus on the exit strategy and make various assumption forward looking. I aways assume you buy your profit day 1 on good purchase. Review an exit route if project parameters change. Never under estimate cost, and have good contingency budget. Knowing your local market and being an expert is essential. If the project looks to be going wrong, sometimes the first loss is the best loss as exit to return capital to fight another day.

For our company defining our goals equates to setting our investment strategy. This prevents us from casting too wide of a net and helps narrow our focus so our time is spent efficiently. At its highest level, our goal/investment strategy is to generate passive income for investors and earn superior returns to other comparable real estate investments or general market returns (ex. S&P 500). At a more granular level, we set goals related to location, investment type, and benchmark returns. For our company, we are focused on the Chicagoland area and other midwestern cities that are within a day's driving distance. We are also targeting multi-family investments between 4-50 units and self-storage facilities greater than 40K+ sq ft.

In my 15yrs at TALLBOX with each client we: conduct site visits to assess environment; research area demographics and growth; interview locals for insights; study location vis-à-vis transport and amenities; analyze zoning and building codes; create test fits exploring options within rules; evaluate environmental factors influencing engineering; model solar, wind, noise for performance; research local architectural styles for harmony; build pro formas estimating costs; seek feedback from planners and contractors; use 3D modeling and VR to visualize and test schemes before finalizing.

Real estate is a very local phenomenon. You may know your market very well but know next to nothing of the next one. You should not skimp on hiring a good consultant if you lack the local insight. A professional advice early on can be quite valuable.

Too often this step is seen as perfunctory. The market study should be by an expert in the area and property type. Most importantly, they must be fully independent and empowered to tell you if it is a bad idea. Too often we see studies that have been pushed to indicate demand when there is none.

Here you can't just rely on publicly available information or services like Costar. The best developers take it a step further and leverage their network to aggregate this market information before it reaches other sources. Being first to act on market information is a huge differentiator.

You need boots on the ground! My team consists of eight partners that are located in different markets around the country. We do not believe you can properly assess any deal without have a local expert, so we make sure that we have someone within an hours drive of the project and they know that market very well.

Be realistic about your expenses. You will have a new property, the tax assessment will reflect that. Don't assume that your property can run on a skimpy budget. Your property will be new precisely once - the day you receive your PTO. After that, is an existing property and will be aging along with the rest. The proforma expenses should reflect this mid to long-term reality.

Conduct a capability study , see if your organization is able to perform the necessary actions as per the feasibility study ( financially , organizational, resources , legal status ,….etc.) This may lead to a gap analysis to see your strength and weakness and manage both to execute the project in the most profitable way

If you don't know whether the project is profitable or not, you can't become a successful realtor. A good realtor always tries to maximise the profits of the client.

This is usually the most intimidating for a lot of people getting into the business. I would say at minimum, make sure you can do/understand the following: 1. Income statement/P&L - understand how to read them and how to analyze them. 2. Differences and meaning of CAP rates. This is often misused and misunderstood. 3.Conservative underwriting. The deals never workout the way it shows up on your spreadsheet. 4. The quality of your inputs will determine the quality of your output. Garbage in = garbage out. Always find evidence that supports the assumptions. The last thing I would say is to surround yourself with others that understand how to do development/acquisition underwriting well. This will save you a lot of time and headache.

It’s better to be less aggressive and underestimate the performance of the asset than it is to be very aggressive and over estimate. This is especially true in a market where interest rates are rising.

This is an often overlooked element of development, but its really quite simple to do. More importantly, the earlier you can identify whether a project meets regulatory and zoning requirements without costly hurdles will save you lots of money in unnecessary pursuit costs.

This is actually one of the most important aspects of development. It can be an extremely costly, time wasting and worrisome experience to not get the right advice as early as possible for a proposed development. Work with consultants that understand the entire process not just parts of it as they will give you a well rounded realistic view of the entire development. My company is known for fixing up problems left behind by other short sighted consultants with narrow views. Do not leave it to chance, speak with professional, genuine and honest consultants to assist you.

This is the legal framework that your project must adhere to, much like the rules of a game. You need to be aware of zoning, building, environmental, and other codes. Identifying the permits, approvals, and inspections you need to obtain can help you avoid legal issues and delays, ensuring that your project proceeds without hiccups.

This is your risk mitigation strategy, akin to a fire escape plan in a building. You need to consider internal and external factors that may cause uncertainty, variability, or loss. Market fluctuations, cost overruns, design changes, and legal disputes are some examples. Evaluating these risks helps you prepare contingency plans and allocate sufficient reserves, ensuring that you're prepared for any scenario.

Risk management and mitigation is critical to successful development. Identifying a broad range of risks and using sensitivity analysis will ultimately protect your project and allow you to plan accordingly for any scenario.

Once you are able to identify a viable development site, put together a detailed VOID analysis, to determine if the area even needs another development. Immediately create a proforma to tell you where you need to be at a purchase price based on trade area research (rents, purchase prices, demos, traffic counts, economy health, etc), land work, construction costs, how much you can build per survey, which it will also include utilities and detention. Regarding retail, the safe bet is to follow the new suburban rooftops that will need retail services. Or spend A LOT of money to purchase or do 99 year Ground Lease on an older property in high end areas and go vertical with lifestyle/high-end tenants, office, entertainment and multi-family.

While deciding to invest in real estate, especially abroad in a foreign country where there is a "trend" or incoming FDI and attractive benefits. No matter how much you study the market or conduct analysis through your research, there will always be a risk high or low but definite because of new regulations, new policies, and new environmental and economical circumstances Thus, the first thing you need to understand and apply is your exist strategy, when to buy and when to sell. Period.

Studying a real estate project thoroughly is crucial for its success. Define Project Objectives: Clearly define the project's objectives and goals. What do you aim to achieve with this project? Understanding your purpose is the first step. Location Analysis: Research and assess potential locations for your project. Consider factors like demographics, market demand, accessibility, infrastructure, and proximity to amenities. By following this structured approach and conducting thorough research, you can make informed decisions and increase the likelihood of a successful real estate project. It's also important to stay up-to-date with market trends and regulatory changes that may affect your project over time.