Cashflow & Feasibility
Create property deal structures using legal entities and vehicles with differing forms of ownership, capital stacks, acquisition, and management methods.
For a land development project, financial feasibility usually considers things like land acquisition cost, development and infrastructure costs, financing costs, taxes and fees, lot or home sale revenue, absorption/takedown timing, cash flow, profit margin, IRR, and overall return on investment.
A discounted cash flow model evaluates financial feasibility by forecasting the timing of project costs and revenues and converting those future cash flows into today's dollars, allowing the developer to determine whether the expected return adequately compensates for the capital invested, time, and project risk.
In LDEV 668, we created a DCF model that determined the base lot price that would generate the most ideal IRR.