Why a Feasibility Study is Vitally Important

You found the perfect property and you are ready to buy it. Your heart and soul have told you that this is it! This is the best opportunity that you could ever invest in. You have even run your preliminary research and it agrees with you. You have had people agree with your numbers and you are sure that this is it!!! Great, now it is time to get a Feasibility Study.

A Feasibility Study will not only verify what you already know or hope you know; it will give you more credibility with your lender and your potential investors. A feasibility study is designed to verify everything and that gives you more credibility. People know that you have done your homework and they can rely on what they are being told.

A Feasibility Study is expensive, but in the long run, it will pay for itself. Someday you are going to be wrong, and it is going to save you from making the biggest mistake of your investing career.

To begin with, a Feasibility Study will check the rents in the area and verify your rent projections. They will look at other facilities to see what their occupancy levels are to predict what your occupancy levels will be. This will allow you to calculate your Gross Operating Income more precisely. It will also tell you what the supply index is for that area.

If the supply index shows that your market is oversaturated, then you may not want to invest in that particular property. If the supply index shows that your market is undersaturated then you have probably found an opportunity. A Feasibility Study will let you know which market you are in. If you were planning on buying a property with a high vacancy rate with the expectation of running the property better so that you could increase the occupancy levels in an oversaturated market, you will be making a terrible mistake.

In addition, a Feasibility Study will verify that you are in a location that demands self-storage. You do not want to build or remodel or purchase in an area that does not need self-storage. For example, if you are looking in a neighborhood with high square footage homes, those homes may have enough room that they do not need self-storage. On the other end of the spectrum, you might be in an area where people have not acquired enough to need self-storage. This study will let you know whether or not there is enough demand at this location. You want to be in a location that has properties that need self-storage within a 3 mile radius of your property.

Another thing that they check about your location is the possibility of being out located. You do not want to be in an area where other properties are already in the process of being approved by the city. You do not want to be in an area where someone else can come and build between you and your potential renters.

They will also check your location to make sure that it is in the right demographic. We already talked about the size of homes within a 3 mile radius. Now we are going to talk about income. If people make too little, then they cannot afford self-storage. Your Feasibility Study will help you to know if the people within a 3 mile radius can afford to rent from you. If they cannot afford your rates, then you will not be able to fill your self-storage facility.

The Feasibility Study will also look at the traffic count. Do enough people pass by your property that you will get good exposure? Is your sign going to be appropriate to attract new tenants? You want to make sure that you are getting street exposure. However, the most important place to be successful in your advertising is on the first page of Google.

While each of these things may seem small in and of itself, you will find that they add up to make a huge difference in whether or not your property will be a good investment. Your Feasibility Study will not only help you to know that you have found a good deal, but it will also allow your lender and your potential partners to feel comfortable investing with you. Your feasibility Study will show them that you have the research to back you up.