Residual Land Value Calculator
Calculate residual land value from projected revenue, development costs, and profit margin. Free, fast, and private.
How it works
Residual Land Value = Projected Revenue - Development Costs - (Projected Revenue × Profit Margin %). This determines the maximum you can pay for land while achieving your target profit.
Example
$2,000,000 revenue - $1,200,000 costs - ($2,000,000 × 20%) = $400,000 maximum land value.
FAQ
What is residual land value?
Residual land value is the maximum amount a developer can pay for land while still achieving their target profit margin. It's calculated by subtracting development costs and desired profit from projected revenue.
How do you calculate residual land value?
Residual Land Value = Projected Development Revenue - Development Costs - (Projected Revenue × Profit Margin %). This gives you the maximum land cost to achieve your target return.
What profit margin should developers target?
Profit margins vary by project type and risk. Residential developments typically target 15-25%, while commercial projects may target 20-30% depending on market conditions and risk factors.
What costs are included in development costs?
Development costs include construction, permits, professional fees, financing costs, marketing, contingencies, and all expenses except land acquisition and the desired profit.
When is residual land value analysis used?
Developers use residual land value analysis during site acquisition to determine maximum bid prices, feasibility studies, and to evaluate project viability before committing to development.