Residual land valuation calculator
Residual land valuation finds the most a developer can pay for a site. Start from the gross development value of the finished project, subtract construction, soft costs, finance costs and the developer margin, and what remains is the residual land value. Change any input and the result updates.
Residual land value calculator
The residual land value formula
Residual land value = gross development value minus construction and site costs minus soft costs minus finance costs minus contingency minus developer margin
Finance costs = average drawn loan x interest rate x build time, a common simplification for a construction loan drawn over the build
If the residual land value is below the asking price of the site, the project does not work at your margin unless prices, costs, density or timing change.
Test scenarios before you bid
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01
Change the unit count to see what density does to the land value.
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02
Lower the sale price by 5 or 10 percent to see how much room the deal has.
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03
Raise construction cost or interest rate to stress the deal.
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04
Stretch the build time to see the cost of a slow permit.
Developer mode on the Scale and Enterprise plans saves scenarios per parcel and compares them side by side. Land developers.
Residual land valuation questions
What is residual land valuation?
It is a method that values land by what a development on it can support. The finished value minus all costs and the required profit is what the land is worth to that developer.
Why does a small change in price move the land value so much?
The land value is what is left after large costs. A 5 percent drop in sale prices can remove a much bigger share of the residual, which is why the calculator lets you test scenarios.
Is residual land value the same as market value?
Not always. Market value comes from what similar sites sold for. Residual value is what a specific project supports. Compare both before you bid. Commercial land valuation.
Does the calculator save my numbers?
Inputs stay in your browser while you work. With an account, you can save scenarios to a parcel.
Check the site value against the market
Price the site from comps and compare it with your residual land value.