Model Input Page
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, calculate the effect of builder deposits on interest cost and profit, estimate the worth of real estate options, and much more. The website incorporates a sample residential subdivision to demonstrate the ease of input and significant output capacity of the model.
The LDM consists of a single input page where the user enters variable land development components. The model estimates the profitability of single and multi-phase subdivision projects based on the values and interaction of development components such as land cost, number of lots, number of phases, revenue, selling and development costs, absorption, builder deposits, interest rates, interest rate trend, loan requirements, seller financing, the use or non-use of purchase options, the length of the construction period, the marginal tax rate, and recognition of the timeline concept inherent to land development.
The model allows for what-if analysis (or ‘scenario’ analysis) based on variations of one of more of these components. For instance what impact does seller financing have on profitability? When dealing with a multi-phase project, how much does a purchase option affect project profitability? How much will profit change if the absorption rate is modified? What effect does the direction of interest rates have on profit? Or what is the estimated land value given a target profitability ratio? Answers to these questions, and many others, are calculated by the model.
Variable entry to the input page is actually very easy. A few times through the model and you will have it. The input page provides directing and correcting prompts in the form of notes in a prompt column to keep you on track. In the event you inadvertently make an entry in a field that does not require one, or leave a field blank that requires an entry, the 'model consistency' section will identify the inconsistency and direct you to the corrective measure. Additionally, the data entry process is enhanced by the incorporation of 'field clearing' and 'auto-entry' macros.
The sample project is a ninety one lot, three phase project with one land purchase option, three builder deposits and seller financing. Absorption is 1 lot per month. Construction begins in March and the first lot sale is in August.
You may wish to use the take off page to pencil in data and make field notes before entering data directly to the model input page.
If you wish to ask us a question about the model, 'Contact Us' and we will get back to you as soon as possible.
Land Development Model, LLC
302 West Lafayette Road
Medina, OH 44256