If a developer estimates the development costs, he must take into account both the direct costs and the indirect costs. The most important reason why some projects fail are that the estimated costs are not accurate. It is imperative to estimate development costs as accurately as possible and to pay unexpected surplus overheads for reserve funds, which may be catastrophic to your planned profits.
Knowing the cost of development costs will help your project succeed. Some of the basic cost factors are:
What is direct cost Direct development costs include land acquisition costs, engineering costs, construction costs and marketing costs
19659007] Indirect costs include fees for professional services of market feasibility analyzes and evaluations, attorneys' fees, accounting fees and financing costs
Feasibility study: analyzes demand at the beginning of the study and to compete for the present and the future to determine whether the project will be successful. The results of the study will help the developer to decide whether to continue the development project.
It is important that your development costs are as accurately as possible and that security resources are provided for unexpected overheads that can be catastrophic to your planned profits.
Cost Analysis . It is recommended that you carry out a cost analysis to assess the primary development risks.
Obstacles to Avoid:
1. Tax returns .
The first step is to talk to your tax adviser before we begin, and determine what type of organization you choose to run the project, saving the most tax costs, namely, the company, LLC, individually, partnership.
2. Environmental Pitfalls
Assessing environmental issues affecting property may be a major cost factor in spatial development. I and II. Phased environmental reports help you determine what costs you can incur to environmental cleanup issues. Phase I report provides information on current and past uses and whether chemicals or hazardous waste have been moved to the site. Phase I also suggests that further testing of groundwater and soil should be carried out and provide purification suggestions and / or other options. The II. Phase report provides detailed information on the level of hazardous chemicals in groundwater or soil.
Today, federal and state government agencies are more involved in environmental issues such as wetland habitats and endangered species. At an early stage of the project, you need to measure the risks and costs in order to make sure that the financial impact of granting natural resources on the project is significant and whether it should contribute to the development. Failure to Deliver Delivery Deadline
4. Building Cost Overruns
5. Assessing Demand
Making a Detailed and accurate Website Analysis Report Key . The report looks at and analyzes the demand for a project in this area, as well as competition in the field and future competition. Calculation of such calculations may lead to project error
6. Unrealistic Pricing
This is complicated because when you start a project in a real estate upward cycle, pricing will be the highest. However, if the market ends before or after the completion of the property, it will have to adjust the prices accordingly. Particularly when Developing Residential Areas
Building up an experienced development team of architects, developers, lawyers, project consultants, civilian, soil, landscape and structural engineers and consultants for analysis and review of planning studies, applicable zoning and code requirements, environmental and you will be able to determine your development costs and how to achieve the maximum development potential of the real estate.
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