A practical feasibility model answers one question: Does the project still work after realistic costs, realistic timing, and realistic sales assumptions? If you’re doing a small development (2–6 dwellings) or a renovation with an exit (sell or hold), a simple model is often better than a complicated one—because it forces you to be clear about what actually drives margin.
The simplest model structure (what to include)
Think in four blocks:
1) Revenue
Sale price(s) or end value(s). If you’re holding as rentals, use a conservative valuation approach and model rental cashflow separately.
2) Total project costs (direct + indirect)
Land, consultants, consents, build, civil, infrastructure-related charges, marketing/sales, contingency.
3) Time-based holding costs
Interest, rates, insurance, site holding/security, and “time risk” (delays).
4) Tax/GST assumptions
These can change the final outcome more than people expect—so keep them explicit and confirmed.
Step-by-step: build your feasibility in 9 moves
Step 1 — Start with “Sources & Uses”
Sources: equity + debt (land loan, construction facility).
Uses: land + all costs until sale/settlement or refinance.
This is the fastest way to see if your funding plan actually matches the cashflow shape of the project.
Step 2 — Break costs into “one-off” vs “time-based”
One-off costs: consultants, consents, build contract items, DCs, marketing.
Time-based costs: interest, rates, insurance, programme delay.
This distinction matters because delays don’t just annoy you—they cost you.
Step 3 — Model DCs as both a cost and a timing event
In Hamilton, council guidance explains you may be required to pay a development contribution when a resource consent is granted, a building consent is granted, a Certificate of Acceptance is granted and/or a service connection is authorised—so the trigger is not always “at the end”.
Hamilton also provides an estimator and notes the council can estimate charges when you apply for consent or service connection.
Practical Waikato/Hamilton note: DC timing can materially change interest costs—so don’t treat it as “just another cost line”.
Step 4 — Build a simple drawdown schedule (even if it’s rough)
You don’t need QS-level detail; you need a credible shape:
- Early: prelims, civil/siteworks, slab/foundations
- Mid: framing, roof, cladding, services rough-in
- Late: linings, waterproofing, fit-off, external works, CCC close-out
Best-practice feasibility guidance for property professionals emphasises you must make appropriate assumptions for cashflow/drawdown and use a realistic interest rate.
Step 5 — Include a contingency that matches risk
Common approach:
- Build contingency (e.g., 5–10% depending on design certainty and ground/civil risk)
- Time contingency (e.g., +4 weeks minimum)
If you’re in areas where stormwater solutions, clay soils, or flood-related requirements are likely to add complexity, keep contingencies closer to the conservative end.
Step 6 — Add selling/exit costs properly
If selling: agent fee, marketing, staging, legal, settlement adjustments.
If holding: refinance costs, valuation, initial letting, and a vacancy allowance.
Step 7 — Put GST and income tax in a separate section
Inland Revenue warns that GST and property treatment depends on circumstances, and provides a specific tool/guide for GST on property transactions.
IRD also states you’ll probably need to pay tax on profit if you’re a dealer, developer or builder, or otherwise involved in the property business.
Practical rule: don’t “guess” GST. Decide your strategy (sell vs hold; taxable activity or not), then have it confirmed before you sign purchase/contract documents.
Step 8 — Stress-test the three variables that break most projects
Run three simple sensitivities:
- Sale prices: -2.5% and -5%
- Build costs: +3% (or more if you’re pre-tender)
- Time: +4 weeks and +8 weeks
If any single stress test wipes out your margin, the project is too tight—or your assumptions are too optimistic.
Step 9 — Link feasibility to buyer finance reality (yes, it matters)
Even small projects depend on end-buyer borrowing capacity. RBNZ’s LVR settings influence how much low-deposit lending banks can do (which affects buyer depth at key price points).
If your project targets first-home buyers, this can affect presale conversion and settlement risk.
A “minimum viable” feasibility checklist (copy/paste)
- Revenue: conservative end prices + evidence
- Costs: land + consultants + consents + build + externals + marketing
- Council charges: DCs included with timing
- Holding costs: interest + rates + insurance + security (time-based)
- Contingency: cost + time
- Tax/GST: explicit, confirmed assumptions
- Sensitivities: price, cost, time
- Decision: proceed / redesign / renegotiate / walk away