What's New & What Happens

What information is required prior to conducting an investment feasibility analysis? Why is it necessary?

(1)Client's objectives. What the client is attempting to do, both generally and specifically, must be clearly stated and agreed upon by both client and analyst. This statement of investor motives is the basis of the entire study. These objectives might include: capital accumulation, tax shelter, protection of capital from inflation, current income, the acquisition of premises for occupation by an individual or company, etc.

(2)Client's resources. The availability of resources will limit the strategies for the real estate investment which may be pursued. Resources may include capital, expertise, staff, time, other assets, and access to debt financing, etc.

(3)Client's risk position. Clients may have different degree of risk aversion; different risk levels may effectively affect investor’s decisions. Therefore, analyst should make clear the client’s risk position. There are different forms of risk: security of income, security of capital, protection of purchasing power, etc. It’s essential not only to be aware of the degree of risk the client is willing to assume, but also to distinguish between these various types of risk.

(4)Client's current status. With respect to the subject matter of the study, what research has the client done already? To what extent is the client already committed to a course of action, etc. The current status may significantly affect the analysis approach to conducting the study.