With the uptick in the real estate market we have also seen a resurgence in our hard money construction loans. We are getting many requests for ground up construction loans, construction completion loans and rehab loans for California properties these days. While the improving real estate market helps loosen financing to the point where people can obtain funding for their projects again, we do still see projects that fail for one reason or another. This brings us to our topic for today, the benefits of feasibility studies.
Even the best laid plans go wrong sometimes. With that being said, plans that are not well laid out are going to go wrong even more often. This is very true for construction projects. It is not uncommon to see upfront projections that are optimistic with regards to cost, time or both. Also it is not uncommon to see budgets that do not have any contingency money included. As the project scope increases, there are more and more items that can be overlooked or misbid.
A feasibility study is a good way to guard against potential issues of this nature. While a feasibility study will not eliminate all risk, it will ensure a third party goes over the project in detail and gives their opinion on the project, scope, time and cost. Even small rehab projects can benefit from a feasibility study. Typically these studies are going to review zoning, permit status and budget feasibility at the minimum. While costs on these studies can vary widely there are companies out there that will complete these studies for a very reasonable cost.
If you are working on a construction project, consider having a feasibility study done. This is especially true if you are dealing with permits, adding square footage or ground up construction. The cost is typically going to be well worth the confirmation or adjustment to your original budget - and if something comes back that is dramatically different than your projections or current numbers it could help avoid getting stuck in a problem project with diminishing profits. Although everyone wants to see their project be successful, sometimes the best projects are the ones that you do not move forward with - avoiding the potential issues and utilizing your time and effort on more profitable endeavors.
Visit us on the web for more information on our California hard money construction loans, construction completion loans or ARV rehab loans. Or, if you prefer, give me a call today at 877 462 3422 to discuss your scenario and how I may be able to assist with the financing required.
Comments (0)Subscribe to CommentsComment