An Appraisal and Valuation Tool
1.) Estimates the profitability of 'single and multi-phase' land subdivisions at once;
2). Extends analysis beyond 'gross profit' to 'profit before tax', resulting in an interest cost calculation based on the cumulative effect of the absorption rate, project duration, builder deposits, lender loan requirements, length of the initial construction period, seller financing, interest rate fluctuations during the project period, phasing decisions, land purchase option alternatives, and residual land;
3). Allows for quick and easy 'what-if' analysis on all land development components - above and below the gross profit level.
4). Can be used to estimate, support or extract land value.
5). May be used to develop pro forma financials.
There are many interrelated land development components, and modification of any one of them will impact profit. This model allows you to quickly and easily modify variable land development components, singly or in combination to estimate the effect on profit, estimate or support land value, calculate interest cost, estimate the worth of real estate options, and much more.
Once relevant land development components are entered to the LDM input page, several model output tables and schedules are generated. They include a project summary table, a profit by phase table, annual profit and cash flow tables, a lot sale schedule, a key variables page, a cash inflow and loan reduction table, an interest calculation table, and an owner tax calculation page.