CASH FLOW & FEASIBILITY

Create property deal structures using legal entities and vehicles with differing forms of ownership, capital stacks, acquisition, and management methods.

To understand Financial Feasibility we must first comprehend the definition. According to Kent Anderson, Financial Feasibility can be described as “a property that can generate enough income to support it’s own debt to finance the property & to provide a cash return to the developer and its investors”. Understanding the financial feasibility of a project helps to determine the potential Return of Capital & Return on Capital. Return of Capital is the payback to the equity partners and the Return on Capital is the profit payout. Discounted Cash Flows occur during the third stage of income property development and help to assess how attractive a development is to a potential investor and the financial feasibility of a project.

In our LDEV 668 class, we were tasked with finding the Financial Feasibility of the Twin Creeks development located within Allen, Texas. Through this assignment we analyzed the feasibility of seven various lot types, all with differing prices, and take down schedules. Overall, we attained a projected IRR (percentage of profitability) of 26.4% for the development.

Click below to view the DCF my teammate, Tim Ryan & I created.