Choosing the right Property Development Feasibility option

1. Know your options

   Should you opt for a spreadsheet template or a platform? Spreadsheets aren’t built specifically for feasibility analysis, they do the job but formulas, macros and functionality is retrofitted to accommodate agnostic spreadsheet usage. You will be required to purchase spreadsheet software before you load the spreadsheet feasibility template. Platforms on the other hand are purpose-built for property development feasibilities. The technology, customisation and productivity will completely supersede a spreadsheet template option. Would you rely on your financials from an Account that still only used spreadsheets V’s software like Xero or MYOB.
   

2. Country of origin

   Property Development is unlike any other industry in the world. It’s complex and there are vastly different statutory, legislative and tax regulations between countries and states/ territories within countries. This means, investigating which country the feasibility template or software is specifically built for and does it cater for the nuances of your region.
   
   Consider whether the solution helps in determining tax exemptions, legislative duties and schemes i.e transfer duty, margin scheme (applicable to Australia only). The incorrect application of legislation and calculations of GST liabilities and GST reclaimed will have a material impact on funding, cashflow and a project’s viability.

3. Evaluate the costs

   Be sure to compare the costs of each option and weigh them against the benefits each solution offers. Look for additional (and often hidden) costs associated with training and support. Consider cancellation policies and payment options — monthly or annual. Some spreadsheet templates are single-device use only, meaning you would need two licences for additional devices/ computers.

4. Testing

   Load an existing feasibility study to directly compare it with your development strategy. Expect differences in amounts, as each solution will vary, especially if designed for another country's market. In the Australian market, for instance, test if the solution handles the Margin Scheme. Does it accommodate multi-site land acquisition where one site has the Margin Scheme applied and the other is GST payable on purchase? Or does it offer options to manage senior debt funding drawdown variable interest rates? These options can significantly impact the financial outcomes, risk, and viability of the project.

5. Breaking Formulas

   A major advantage of a software platform is you can not accidentally break a formula, in fact, you won’t even see one, the powerful technology does the heavy lifting for you. Unlike spreadsheets which are notorious for errors (over 90% have mistakes). There is no need to see formulas or #REF! error if you do… run a mile.

6. (Critical) Assess the funding section

   Property development funding is complicated, with senior and subordinate debt options, capitalised (interest on interest) and non-capitalised funding facilities, debt waterfalls, moving interest amounts based on facility drawdown amounts, different senior debt LVR methods … the mind boggles. Having a robust funding section will reduce your exposure risk and the ability to run numbers if you need to pivot quickly. This is where platform solutions reign supreme, the technology and interface will have been built to do the heavy lifting and remove the complexity for the user.

7. Product & Feature updates

   Spreadsheet templates will be as-is, and there will be little innovation or iterations. Platforms however have teams dedicated to user experience, product development and technology. They’ll monitor the usage of the platform and constantly rollout new features and enhancements.

8. Check for Compatibility

   Spreadsheet templates will often be limited to operating systems. ie. use on a PC or Mac only and allow for a single device download i.e one computer. You will be required to keep your spreadsheet software up-to-date or you’ll encounter compatibility issues, and broken macros. Platforms, on the other hand, are agnostic— you can login via any web browser on any device, anytime, from anywhere.

9. Feasibility version control

   A major issue with spreadsheet templates, even more so in property development is managing multiple feasibility spreadsheet versions. With costs and sales prices as constantly moving targets, you’ll often end up with several separate spreadsheet files to capture financials at a point in time. On the flip side, platforms are purpose-built and will like have quick feaso duplication capabilities and quick access in a single location (a dashboard).

10. Customer Support

    This is critical. Waiting a week for help is unacceptable. Check the feasibility analysis solution has a dedicated customer support centre (who are responsive). Also check if there is additional costs for onboarding, training and support.

11. Make a decision

    After considering all the above factors, decide which property development software option is best suited for your needs. Be sure to consider both short-term and long-term costs and benefits, and evaluate the software's ability to help you meet your business goals.