Property Development Feasibility Calculator
Build a residual feasibility for a small development: land, construction, professional fees, finance and contingency into Total Development Cost, then profit measured both on cost and on gross realisation. Includes GST under the margin scheme.
Your details
Revenue
Agent commission and marketing
Costs
Design, engineering, council contributions, legals - as % of construction
Finance
Tax
| Gross realisation (GRV) 4 x $1,100,000 | $4,400,000 |
| Less selling costs | $110,000 |
| Less GST (margin scheme) | $290,909 |
| Net realisation | $3,999,091 |
| Land + acquisition costs | $1,266,000 |
| Construction | $1,520,000 |
| Professional & statutory fees (12.0%) | $182,400 |
| Contingency (5.0%) | $148,420 |
| Finance cost 9.50% on an average drawn balance of $1,215,560 for 18 months | $173,217 |
| Total development cost | $3,290,037 |
| Peak debt (at loan to cost) | $2,025,933 |
| Equity required | $1,090,887 |
| Profit on GRV | 16.1% |
| Return on equity | 65.0% |
| Residual land value at a 20% hurdle what you could pay for the land and still hit 20% | $1,242,538 |
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Frequently asked questions
What profit margin do lenders require?
A profit on cost of about 20% is the conventional hurdle for residential development finance. Below that, most construction lenders will either decline or require more equity.
What is residual land value?
The most you can pay for the land and still achieve your target profit. It is the standard way to test whether an asking price works, rather than starting from the price and hoping the numbers land.
General advice warning: This calculator provides general information only. It does not take into account your objectives, financial situation or needs, and it is not personal credit or financial advice.
Results are estimates based on the inputs and assumptions shown. Any interest rate used is an example and is not an offer of credit. Speak to a licensed credit representative before acting on these figures.