I endeavoured to do a feasibility for a client ito his options of acquiring a new home in a security complex in Stellenbosch, South Africa.
The
options are as follow:
1. Buy an existing house
from an agent.
2. Buy a stand and build a
new house with the contractor and his architect.
3. Buy a stand and build a
new house with me as the commercial manager and his architect.
4. Buy a stand and build a new
house with me as the commercial manager and my architect.
FEASIBILITY
– WELGEVONDEN – 3 BED 2 BATH 1 GAR
Scope:
1. Best value for money investment.
2. Design of house based on best sales / m2 of house. It affects the ROI
(Return on Investment) of the project.
3. People stay on average 7 year in a house before they sell it, therefore
investment has to be based on the fact that it will be sold within 7 years.
4. Ways that risk need to be minimized defined as:
a. The probability of loss.
b. The probability of not receiving what was planned at inception.
c. The difference (or potential variance) between expectations and
realizing what was planned at inception.
d. The expected or most likely return and the variance of it.
e. The likelihood that the investor will not receive the expected rate of
return on the investment
5. Trust that the project will be a success.
6. 3 Bedroom house, 2 bathrooms & 1 garage.
7. Average size of house = 145 m2.
8. Average sale price of houses in Welgevonden R 9000
9. Cost of house required = 145 m2 x R 9000 = R 1 305 000 VAT inclusive.
10. Costs of finishes will vary outcome of feasibility.
Estimate Feasibility
Comparison:
· Column: 1 – Buy house as is
oSize of house = 140 m2
oR / m2 incl. VAT sales price = R 8 572
oAgent sales commission @ 7,5 % = R 85 856
oROI = -15.22 % if sale occur at R 9000 / m2
· Column: 2 – Normal - Buy stand & employ a contractor
oSize of house = 140 m2
oR / m2 incl. VAT Contractors Construction price = R 5 800
oAgent sales commission @ 7,5 % = R 82 895
oROI = -33.49 % if sale occur at R 9000 / m2
· Column: 3 – Appoint – Commercial Manager (CM) + Owners Architect
oSize of house = 140 m2
oR / m2 incl. VAT Commercial Manager Construction price = R 3 850
oAgent sales commission @ 7,5 % = R 110 527
oROI = 6.03 % if sale occur at R 12 000 / m2
· Column: 4 – Appoint – CM + CM chosen Architect
oSize of house = 140 m2
oR / m2 incl. VAT Commercial Manager Construction price = R 3 850
oAgent sales commission @ 7,5 % = R 138 158
oROI = 29.51 % if sale occur at R 15 000 / m2