Housing Feasibility Studies - Continued...

A market feasibility study is an analysis of the potential near-term and long-term market conditions within an area where a given business (a housing project in this case) is likely to garner the majority of its ongoing sales.  This includes an assessment of the changes in population demographics, consumer spending, employment, income, household wealth and related demographics, as well as an analysis of the competing facilities that are already in the market and those that are yet to enter the market.  Click here for an exhaustive look at market feasibility studies.

The cost of rendering a housing feasibility study is based upon the scope of work.  To help you in your initial planning, we will provide a budget for the prototypical housing development program.

The costs set forth hereinbelow are those costs that are typically paid by the developer in advance of the closing of the construction mortgage financing escrow and represents the developer's risk capital in the transaction because once the escrow closes, the developer will be seeking to get the developer's capital funding "off the table" and then reinvested into the next housing project.

Total Pre-Construction Phase Expenses By Division:

1. Market Feasibility Study: $12,500 to $15,000 (the variance relates to the number of competing facilities that must be shopped in the market - once the "comps" are known, the price can be locked in).

2. Financial Feasibility Study: $12,500 to $15,000 (the variance relates to the number of times we have to reforecast the pro forma financial statements based upon changes within the totality of the program/project).

3. Capital Funding Proposal: $4,500.  This is the most important document because it will be used to solicit the required construction mortgage financing loan for the project.  You have to have Rainmaker prepare this document.

4. Business Plan of Operations: $2,500.  This document provides the lender with evidence that, once the financing closes escrow, the project will be ready to complete and operate subject to a defined business plan.

5. Site/Civil/Topo Engineering & Surveys: $12,500.

6. Architectural Design (Schematic Phase): $25,000.

7. MEP & Structural Engineering: $7,500.

8. Environmental: $4,500.

9. MAI Appraisal: $3,500.

10. Construction Cost Estimates: $12,500.

11. Legal/Organizational (borrower): $15,000.

12. Legal (lender): $25,000.

13. Accounting, Tax: $5,000.

14. Commitment Fees: $50,000.

15. Site Control: Varies - use 1% of 8% of the budget as a guide.

About Rainmaker...

Rainmaker Marketing Corporation is the brainchild of Clint Lovell, a seasoned business finance consultant with more than 20 years experience.  Rainmaker is a B2B consulting firm that was incorporated in 1994 for the purposes of providing market feasibility studies to businesses seeking capital financing in the commercial and institutional markets.  Today, Rainmaker Marketing Corporation provides a comprehensive array of due diligence documentation services for most major industry groups.  Rainmaker Marketing Corporation also provides syndication management services for fractional commercial real estate syndicates that can provide mezzanine gap funding for income-producing commercial property developments as early as the pre-construction phase.  Rainmaker Marketing Corporation serves clients throughout North America and the Caribbean Basin.

Rainmaker Marketing Corporation, Inc.

15519 Dawnbrook Drive, Houston, Texas 77068

281.537.1200  

consultants@rainmakermarketing.com