What is a Feasibility Study? Why do I care?

After you have done your preliminary research, you need to have someone back up what you have found. This backup, or proof, is something that you can give to your investors and to the bank that is lending you money. This verification helps to prove that what you are doing is going to be profitable. Without it, you are unlikely to get a bank to sign off on your project.

A feasibility study is a third person research company’s verification of all of your data to help you really understand your project. They will evaluate the competition to find out if there is actually a need for your new self-storage development. Sometimes you are so excited about your project, that you ignore some of the little signs that tell you not to invest in this area.

They go in and research the demographics of the area to verify who is living in that area. They will tell you if the people living in that area have a demand for self-storage or if you should walk away. This way you don’t get so emotionally involved that you might have skipped some of the key indicators that warned you that this was a bad location.

If you are working in a market that you are familiar with a feasibility study may feel redundant. However, if you are looking in an area that you have never worked before, you want that expert opinion to help you really understand what is going on in that location. It will help you to understand the nuances of that market before you invest your capital and tie up your funds.

Don’t skip a feasibility study because of the cost. It may end up saving you thousands of dollars in the long run if this is a bad location. It may end up helping you get thousands of dollars from investors by backing up your research if this is a good location. As always, happy investing.