For those focusing on commercial conversions and developments a useful tip when assessing your developments at appraisal stage that will save you pain and anguish later in the development.
When calculating your GDV note that the floor level and aspect of the apartments will have an effect on the valuation/sale values.
This can be a positive or a negative depending on where you are sourcing your information from. If you are using comparables that happen to be from 2nd floor parkland aspect and you then apply that sale p/sq/ft to ground floor apartments overlooking a car park you may well be over estimating the resale value of the unit.
Equally the reverse can apply and you may undervalue your potential development. My recommendation would always be to “under promise and over deliver” on your numbers.
You would not want to be in the position of firming up racy GDV numbers and setting expectations with your private investors capital injection and returns, only to then suffer the real and present danger of significant down valuations and the resulting pressure and angst that can bring in your investor relations which could jeopardise the deal and the relationship.
So when looking at your comparables to support your schemes due diligence make note of aspect and floor level where available to create as close as possible to a like for like analysis.
I hope this EQUATIP will help you strike the right balance of a realistic set of economics early on in your process.