In this video, I walk you through the most significant updates to this model since it’s initial release several years ago. If you continue to use this site we will assume that you are happy with it. 15 – Rent vs Buy Investment Spreadsheet . Pay more and you will either undermine the project's profit or require a price increase to cover the land purchase price. Your development margin was 15.66% which is not bad. Finally you’ll enter assumptions related to financing (rate and loan-to-cost) plus lot sales assumptions (absorption period, finished lot sales price, and closing costs). About the Author: Born and raised in the Northwest United States, Spencer Burton has nearly 20 years of residential and commercial real estate experience. Paid contributors to the model receive a new download link via email each time the model is updated. PropertyMetrics provides web-based software for commercial real estate analysis and presentation. Financing costs are estimated by assuming that Charter Homes invests $4 million in equity and borrows the rest. 15 years (expandable) Reports. Identify the return or profit target for your project. You’ll then drop in some simple land-specific inputs for each phase: land purchase price, earnest money amount, due diligence cost and length, closing month, closing costs, land size in acres, and number of to-be-entitled lots. This is a basic, back-of-the-envelope model for quickly calculating the potential returns and/or estimating the land value of a prospective project. Development Budget Cover Sheet Print_Area_MI PROJECT: ITEM COST Depreciable Amortize Historic RTC LIHTC 4% LIHTC 9% ACQUISITION Build Acquisiton Land Acquisition SITE IMPROVEMENTS CONSTRUCTION Rehabilitation New Construction Contingency Demolition Permits PROFESSIONAL FEES Survey Architect & Engineer Solutions | Blog | Resources | Contact | Terms | Privacy. Do you have questions, comments, or feedback? Planning, Design, & Approvals: There is then the part of the development process that is the most visible to members of planning commissions. Paid contributors to the model receive a new download link via email each time the model is updated. It will cost $2,000 to $10,000 for more than two lots. The initial appraisal is a single page excel spreadsheet where we take the Gross Development Value and subtract the development costs and land costs to establish a profit figure. Miscellaneous costs Description Amount Hard Cost Soft Cost Miscellaneous Costs $25,000 Contingency Allowance 10.00% of Land, Dev. However, land purchases can also spring any number of unpleasant, and often costly, surprises on the inexperienced. 2 - A checklist of the subdivision process including all steps up until the finished product (whether vacant land or 1 lot build). to Home and Roof Framing category): $297,000 Finished Exterior: $52,000 Major Home Systems Rough-in: $285,000 Interior finishes: $260,000 Developers buying large tracts of land to subdivide often budget more for development costs and fees than for purchasing the land itself. He is currently Head of Real Estate Investments and member of the founding team at Stablewood Properties. Just enter a price together with an email address to send the download link to, and then click ‘Continue’. These stages are summarized in an attached Word file, which explains each stage in more details. During that time I built my fair share of residential land development Excel pro formas, modeling returns and forecasting cash flows for my clients and investor partners. m 9f Development Costs Development Costs by Category Product Pricing Marketing & Administrative Expenses General Template Read our Terms and Conditions of Use and Disclaimer. SKU: SKU-487-1-1 Categories: Free Tools From REFM, Land and Housing Tag: Land Development. The video was created using version 1.0, before the option to include a second phase was added. Description ; A one-page Excel model with sensitivity tables to allow you to quickly determine if a land development transaction is worth further analysis. It depends on the amount of clearing required and size of the land. Organize the project’s potential sources of funding, including debt, grants, and developer equity. formatting updates and enhancements, Edited date header on Project-Level Analysis to be the last day of month to match Partnership-Level module, Fixed issue where earnest money was improperly calculated, Added logic that hides Phase II calculations when only one phase is selected, Complete overhaul of Phase I calculations to allow for duplication, Dupicated Phase I cash flows, creating a Phase II option, Added Combined Phase I & II Cash Flow section. Total development costs are $7,277,600. You will receive a response from us via e-mail. Entitlements are estimated at $700,000, development costs at $1.7 million, and financing at $300,000. With your assumptions properly modeled for each phase in your analysis, the Workbook runs an analysis up to 120 months of unlevered and levered monthly cash flows. Phase II timing in summary, Fixed issue where combined cash flow header was using different month end date than phases, Fixed analysis end month formula; had been calculating one additional month, Fixed error where total calculations (Column C) were not including all periods, Misc. 12 Land Acquisition Costs Schedule Input 13 Land Development and Amenity Budget Schedule Input 14 Soft Costs Budget Schedule Input 15 Vertical Construction Hard Costs Budget Schedule Input 16 Construction Bell-Shaped Curve Lookup Table. Land development costs and fees: $42,000 Demolition and Grading (removing existing house on the lot): $124,000 Excavation and Foundation: $355,000 Carpentry plus thermal and moisture protection (similar? This spreadsheet tool can analyze only one project at a time. formatting enhancements on Partnership-Level Analysis tab, Renamed ‘Other Entitlement Costs’ to ‘Other Soft Costs’, Added ‘Development Fee’ line item to ‘Project-Level Analysis’ tab, Linked Development Fee on Partnership-Level Analysis tab to Development Fee line on Project-Level Analysis, Adjusted Levered Net Cash Flow line on Partnership-Level Analysis to add back in Development Fee, Built budget forecasting module for each of the project budget line items, Option to choose start and end month for each budget line item, Revised assumptions section to move timing assumptions to the left of cash flows, Added Lot Sales forecast module with option to forecast straight-line (i.e. Free Development Cost Calculator Fill out the calculator below with your details and within 5 minutes, you'll be emailed a breakdown of your development costs This calculator is designed for multi unit residential developments. https://www.adventuresincre.com/wp-content/uploads/2016/09/land-development-pro-forma.jpg, https://www.adventuresincre.com/wp-content/uploads/2018/04/black-logo-with-top-2-e1523391010256.png, © 2014 - 2020 Copyright - www.AdventuresinCRE.com, LLC, Setting your Sights High with Alex Williams – AiA, A.CRE Jobs of the Week (Updated 12.14.2020), single family home construction pro forma for home builders, List of A.CRE Accelerator Graduates (Updated Dec 2020), The Definitive Guide to Microsoft Excel for Real Estate, Cleaned up unnecessary links in deprecated Named Cells, Updated ‘Phases to Analyze’ drop-down to make the logic more clear (cell O4), Updated Conditional Formatting to accommodate ‘1 Phase’ vs. ‘2 Phase’ input, Fixed issue with Conditional Formatting where certain cells were still visible, that shouldn’t be, Misc. Over his career, he has underwritten $30 billion of commercial real estate at some of the largest institutional real estate firms in the world. Any model with land cost as an input will do, but in this case I’ll use my Residential Land Development Pro Forma. B. The analysis allows for up two phase of construction, however with a little tweaking you can easily adapt the model to work with more than two-phase projects. Before bidding on land, you need a rough budget for major development costs. & Financing Costs Construction Financing Folder Equity: $2,800,000 Interest Rate: 8.50% Development Time Pre-Construction Period: 7 Months Construction Time: 6 Months Sales Period: 13 Months In addition, a surveyor will charge between $500 and $2000 for a mid-size property to be surveyed and platted. Models downloaded from A.CRE may contain errors. 3 Higher Interest Rates – Again, due to the high risk nature of land loans you should expect to receive a higher than average interest rate from your lender. Print-ready, brandable reports are included in the model. Expect to pay between $1.25 and $2 per square foot of land. Free Land Development Back of the Envelope Excel Model Template (Copy) $ 0.00. Next, you’ll enter entitlement assumptions (length and costs) and construction assumptions (length and cost). As time permits, I’ll record an updated video to go with v1.20+. Permits; Impact Fees; Closing Costs; Real Estate Taxes; Insurance; Document Stamps The flexible cash rent approach used in this calculator is to multiply the base rent by: 1) the ratio of the Year End Price to Base Price, 2) the ratio of the Year End Yield to Base Yield and, 3) the ratio of the Base Input Costs to Year End Input Costs. Your total development cost was 432,300 and your total profit was 67,500. We use cookies to ensure that we give you the best experience on our website. The model spits out a summary of the estimated internal rate of return and equity multiple for the project, both on an unlevered and levered basis based on various assumptions. Do you need a real estate development budget template for a bank loan or to analyze your commercial real estate project? Organize the project’s total development budget to identify ALL development costs. TOTAL COSTS DEVELOPMENT INCL GST Total incl GST $ 2,542,850.20 TOTAL GST COSTS 2,542,850.20 Details Time Frame Years Rates Insurance PerAnnum Transfer Costs Value of Land Total Legal & Property Costs GST Exempt Undeveloped Rates & Site Disbursements 2 … If, for any reason, any assumption or input needs to be adjusted, it ... differences in land use types and development density within a region. To make this model accessible to everyone, it is offered on a “Pay What You’re Able” basis with no minimum (enter $0 if you’d like) or maximum (your support helps keep the content coming – typical real estate Excel models sell for $100 – $300+ per license). The increased cost of land, materials and regulatory delays (among other things) have made real estate development for housing and commercial purposes a very risky proposition. However, everything being constant, the more you pay for the land, the less your development margin is going to be because there’s no way you can actually … Study of prices for land plots of the Housing Promotion Fund in the management of the project of integrated residential development. Add to cart. If you are purchasing raw land, the preferred down payment can be as much as 30% to 50% of the total cost. I’ve since transitioned into the institutional side of commercial real estate investments and don’t have opportunities to model these types of deals any more, but I nonetheless still possess the skills to pound out a quick land development model in Excel when necessary. ... workforce housing at the lowest cost basis and would be preferred. Spencer holds a BS in International Affairs from Florida State University and a Masters in Real Estate Finance from Cornell University. NOTE: Land, land development costs, impact fees, local government fees, etc., are not included in the estimated total cost to build this house. Development costs include on-site land improvement, off-site improvements, and estimates for administration, contingency, and marketing (5 percent of revenues). Under Project Costs in Figure 1, Land Acquisition is shown as costing $2,575,000. In return, a substantial increase in the purchase price will be offered. Site development (also called site improvement) costs can vary dramatically depending on … 17-Acre Land Development Proposal ... development and to and from other places in the Bayshore area. We can then assess the profitability of the project by assessing the profit figure as a percentage which will guide us to our decision on whether to pursue the site or not. Land development today involves a rigorous, comprehensive set of evaluations and approvals involving multiple parties in ... development cost and timing, other project costs, soft costs, and fees and determine land prices Calculate the loan-to-value ratios Those updates include the ability to analyze up to two phases, the addition of a more robust sales and project cost forecasting module, and the inclusion of partnership-level return calculations. In recent years, there have been large, steady increases in the costs of development. Since releasing this model several years back, I’ve made several updates to the model including the ability to now include a second phase in your analysis and the option to also model partnership-level (i.e. Over the years, I’ve received numerous requests to put out a back-of-the-envelope model for developers of single-family lots. I put together a simple video that explains the different assumptions and outputs of the model. I also talk through what the model is and isn’t (it’s a back-of-the-envelope model, not a comprehensive analysis tool). Even one that has been used for a small project would be great to get an idea of likely costs. Director's Rule 3-2011, Refund of Development Fees; If you need help estimating your permit fees, you can use one of these sites to ask a fee-related question: Building Permit Questions; Land Use Questions; Be sure to provide detailed information for the best estimate of your permitting costs. Fill out the quick form below and we'll email you a free real estate development budget template. . Resource Links Economy of construction, 2 (14), 7. The last attached Excel spreadsheet is based on chapter 6, which focuses on industrial development. quickly calculating the potential returns and/or estimating the land value of a prospective project Extends analysis beyond 'gross profit' to 'profit before tax', resulting in an interest cost calculation based on the cumulative effect of many land development components; 3). Verify formulas/methodology before basing investment decisions on any model here. The first step in building a real estate development model is to fill in the assumptions for schedule and property stats. Summary: Cost to Subdivide Your Land Local fees will cost between $500 and $1,500 to split a property into two. Stage 4: Monthly Cash Flows during the Development Period; and Stage 5: Discounted Cash Flow for Investors. Cost of Site Preparation and Land Clearing Summary: Site Preparation and Land Clearing Prices. Residential Land Development Pro Forma (Updated Dec 2020). Drop us a line and let us know. ... SITE DEVELOPMENT G2050 LANDSCAPING G2060 SITE FURNISHINGS G3010 WATER SUPPLY G3020 SANITARY SEWER G3030 STORM SEWER G3040 HEATING DISTRIBUTION G3050 COOLING DISTRIBUTION Nevertheless, the methodology and assumptions are largely the same. Sheet1 Item 1 -Special Use 3 Item 1-Special Use 2 Item 1-Special Use 1 Item 1-G50 Other Site Const. The average cost for site preparation is around $2,700, but the price ranges from as little as $350 to upwards of $8,000. Financial Ability To start, you’ll first set whether to analyze whether the project has one or two phases. Until you actually start getting your own bids and estimates and entering them into your own spreadsheet (see my spreadsheet page for FREE spreadsheets), they will remain approximate. This spreadsheet tracks the following metrics: 1 - A full feasibility spreadsheet that shows all costs and possible costs? The PropertyMetrics team has created a free and helpful package for commercial real estate professionals who need a real estate development budget: The above real estate development budget template is an excel spreadsheet form that includes sections for the following: To be notified of other helpful resources for commercial real estate professionals, be sure to sign up for our newsletter on the right. Solin, A.A. (2010). 248 TYPICAL LAND DEVELOPMENT PRO FORMA ANALYSIS EXHIBIT A.1 (Continued) Percent of Total Cost Cost/ Revenue Expense Per Unit Sq. This rent vs. buy calculator projects the cost of renting and buying over 30 years. Simple) or Detailed, Renamed ‘Phase Length’ to ‘Phase End Month’, Revised Interest Expense calculation to move cash flow to charge cash flow on ending balance of previous month, Added Profit and Loss section to each phase and to combined, Added Phase I vs. Open up a real estate development Excel model that has land cost as an input. Rent vs. Buy Investment Spreadsheet (Excel) Note: To use a locked Google Sheet, go to “File” → “Make a copy.” 16 – Bonus: Investment Property Excel Model. Here's how the model looks: Based on this example, you can only afford to pay $750,000 for the raw land. As many of you know, I started my career in residential land development first as a broker and later as a principal. Understanding the Construction Draw Schedule, How to Calculate an Interest Reserve for a Construction Loan, Eleven Types of Risk in Commercial Real Estate. So this model is on account of those requests. If you have any questions about our “Pay What You’re Able” program or why we offer our models on this basis, please reach out to either Mike or Spencer. The above real estate development budget template is an excel spreadsheet form that includes sections for the following: Land; Site Improvments; Other Site Costs – Devel Fee; Construction Contract; Parking; Hardscape/Landscape; FF&E; Other; A & E Fees; Testing (Soil, ESA, Etc.) You might also like my single family home construction pro forma for home builders. It also calculates equity required, with or without financing, as well as calculates the absolute equity at risk (equity in before entitlements). We regularly update the model (see version notes). equity waterfall) returns. Here is a list of items which should be included: developed in an EXCEL spreadsheet to quickly estimate the cost of planning level improvements analyzed in the CRA. 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