Overpaying for Acquisition The desire to secure a piece of land or vacant property with promise might lead developers to be overly aggressive in the acquisition stage of a project. In order to win the deal, developers will sometimes bid at an unrealistic price, believing costs can be offset with a lower construction budget or higher rent and sell-out values post-project. The use of spreadsheets that include a mistake or two when budgeting can further lead to overpaying in the acquisition phase, allowing developers to make faulty estimates going into the project. Before acquiring land or property, developers should conduct due diligence, analyzing the market conditions the property is located in and comparing sales on similar properties nearby. Financial modeling can also help developers budget effectively and make sure they aren’t putting up too much capital into the acquisition stage. Modern real estate development software can help developers analyze budgets on a given project, adjusting for different contingencies while incorporating past project data and market trends to generate a budget that is accurate. By leveraging technology to model financial outcomes, developers can better understand how much to spend in the acquisition stage and ensure a project will deliver ROI. 17