In Feastudy, Lending Interest is for interest income when the cashflow is in surplus (i.e. for those months where total equity to date plus total incomes to date, is greater than all costs, including borrowing interest costs to date). The opposite is Borrowing Interest which is an interest cost (and is usually paid to a financial institution) is for when the cashflow has a cumulative debt.
If you want to undertake a study of a proposal involving the development and then the holding of all or part of that development as an investment, you can use a Develop-and-Hold (D&H) Investment feasibility study file in Feastudy Professional to do this, however for this to happen you must firstly create and then save a relevant source Development file in the program. (A source Development file must not have “Subdivision” entered for its Type of Development in the Development Identification window and must have at least three months of Construction Cost cashflows to be a valid file for the purposes of the D&H Investment study.)
We recommend that you enter data into the source Development file as if all of the components of the development are sold as soon as practicable for fair and reasonable prices and that the settlements of the sales of these components occur after the construction of the development is completed. Among other things, this will help to provide information on the feasibility (or otherwise) of the development on completion for yourself, your partners and for any potential external financiers. In any case, the program will ignore the Sell-On Income, Selling Fees and Vendor’s Conveyancing Fees data that are entered in the source Development file for the purposes of the D&H Investment study because the program assumes that these data inputs are not relevant to the development or that part of the development that is held as an investment.
Once you have created a relevant source Development file, click the New option from the File menu of the program and then click the Develop-and-Hold Feasibility Study button (or, alternatively, click the D&H button in the program’s button bar) to start a new financial feasibility study for a D&H investment proposal and select the relevant source Development file for the proposal.
When a D&H Investment file is linked to its source Development file, the program imports data from the source file into the D&H Investment file for, among other things, the calculation of the Investment Development Cost and cashflows for the Develop Period of the study. For the Hold Period, which is usually the main rent-producing period after the Develop Period, you enter your data in the D&H Investment file’s data entry windows.