Real estate development is an industry with high risk and high reward. There are many factors that determine the success or failure of a real estate project. To be successful, developers must understand and plan for the risks involved. They must develop a strategy to mitigate those risks, should they arise.
When evaluating an investment opportunity, you need to know how long it will take for your initial capital to be recouped. The payback period is the time it takes for a project to generate enough cash flow to recover its initial cost.
When you’re applying for a loan, the lender will have you go through a credit analysis test. The test is designed to check if you are qualified to take on a loan and also assess your risk as a borrower.