This section explains all the assumptions used in the Smart Feasibility Calculator and in turn helps you better understand the working of the application. The assumptions are displayed in the Setup sheet.
The assumptions are explained in detail below:
Assumptions - Below is the list of assumption used in SFC:
If GST/VAT is applicable to your project, then all costs calculated are including the GST/VAT.
Margin Scheme is only applicable in Australia. When you select this option, it calculates GST only on the capital improved value by deducting the land value from gross sales.
Stamp duty is a state levy paid to register a document and is calculated on the value of the land.
Council Contributions - Are fees or taxes or levies for development & infrastructure projects that are paid to local councils, municipalities, or equivalent authorities.
General Assumptions - Agents Comm, GST/VAT Liability & Construction Finance Costs are paid out from settlement proceeds when the project is complete.
Developers Equity Contribution - Are calculated based on the amount of debt available. A negative total means that more funds are available to borrow. If this field is showing a negative value, then it is more likely that you are trying to calculate a debt based on the total sale value and you have entered a very high land GRV. You should also bear in mind that SFC assumes that all costs are funded by the developer except for the borrowings for land and construction.
Abbreviations - Below is the list of abbreviations used in SFC:
LAC - Land Acquisition Cost, Land Value, or Land Purchase Price.
GRV (GDV) - Gross Realisation / Development Value or Total Sales Value is basically the total sale value of all the units that you are developing.
TDC - Total Development Costs
LVR/LTV - Loan to Value Ratio
ROE - Return on Equity or (COC) Cash on Cash Return
Residual Value of Land - is calculated based on Risk Margin or Target Development Margin that you set in the feasibility.
NSA - Net Saleable Area
NLA - Net Lettable Area
GBA - Gross Built Area - The total constructed area including any basement.
Finance Assumptions - Below is the list of financial assumptions used in SFC:
Land Acquisition Loan is assumed to be refinanced with a construction loan before construction starts. You can choose a different interest rate for land interest.
Land Acquisition Loan Interest is assumed to be capitalized during the construction phase.
Interest calculations on construction loan draw is based on the drawdown rate. Draw Down Rate is the intensity/speed at which you draw the construction loan amount that the bank has approved for your project.
Construction interest is calculated assuming the full loan amount will be utilized.
Interest payments on the land loan before construction starts are paid by the developer. When you go into construction and you have a different loan with a different rate of interest just for holding the land, those interest rates are also taken into account.
GST & VAT - Below is the list of GST/VAT assumptions used in SFC:
The Goods and Services Tax (GST) is a value-added tax levied on most goods and services sold for domestic consumption. The GST is paid by consumers, but it is remitted to the government by the businesses selling the goods and services.
To disable GST/VAT calculations - Select NA for the Tax Name field and set 0% for the Tax Rate field.
GST and VAT are treated the same way based on the percentage allocated.
Total GST and VAT liability is calculated using the formula - GST/VAT = (GST/VAT on Sales) - (GST/VAT on Expenses).
All cost calculations are including GST / VAT, if applicable.