Hi! In this article, we're running through how to add a site purchase and create residual site values in Aprao.
Adding a Purchase Element
Firstly, go to the Site Purchase tab in Aprao and click "Add Purchase Element" to get started. You will be shown the site information which you can fill in. When adding a site purchase, you can put a purchase price in as you can see below.
Calculating residual site value
It's really important to know what the residual value is during the development process. With Aprao, you can set the target return on the right-hand side under the Key Metrics section. You can set the target return either as a percentage of costs or GDV by selecting the one you would like to use.
Once you've inputted this, you will see the residual value update in the main Site Purchase area. Aprao is using its algorithm to work backwards, generating all of the costs that have gone into the appraisal tool to now give you a residual site value. By clicking "Apply" you will be able to see the effect on the purchase price.
The Key Metrics section will also update to show the most recent information under RoC, RoGDV, RoE, GIA, Project IRR, Equity IRR, Units and NIA, as you can see below.
If the return on cost is shown within the Key Metrics section to drop below the target value for the development, Aprao's handy tool will automatically adjust it for you so that it will meet the target. Simply click "apply" next to the "residual value" under the Site Purchase tab, and the calculation will re-adjust to meet your target return on cost. For more information on this, visit 2.36 minutes in the video above, to watch this explained in more detail.
Stamp duty and fees
If you're working internationally, Aprao enables you to create a custom stamp duty, by turning on the "Custom SDLT" under the Site Purchase tab. Then you can set a stamp duty amount, either by putting it in as a percentage, or using a third party stamp duty calculator and adding that amount in your currency.
Aprao also allows you to factor in Agents and Legal Fees, because all of these things have a knock-on effect on the residual site value.
Highlighting profit in the Site Purchase section
When working within the Site Purchase tab, you can always check up on the Key Metrics, which will show you your target profit and the expected profit the project will yield. If your target profit is not being met, the risk is highlighted in red, as can be seen below.
This might indicate you're paying too much for a site or fees - highlighting the importance of that residual site value and showing you with Aprao the true value of the development site you're working on.
Hopefully, this has answered any questions you might have on the Site Purchase section, but feel free to post any general questions in our forum. For any specific questions please don't hesitate to email email@example.com and we'll be happy to help!