Whether you are approaching debt or equity investors, they are likely to request comprehensive financial projections aligned with the construction schedule
and revenue structure. This will help banks to determine the coverage ratio and forecast the risk with equity investors to analyze the potential IRR/NPV on their investment. The financial projections are typically included over a five-year
period or in some cases a ten-year period, depending on the construction schedule.
Some real estate investors may also request to see a sensitivity analysis to understand how macroeconomic events will impact the performance of the investment. For instance, how a decline in housing demand in a certain region will impact
condominium sales or decline in regional employment will influence the rental price. These are often included on a case by case basis depending upon the requested information by banks and investors. However, it may not be needed for
smaller residential development projects.