Land development typically involves substantial borrowing requirements. Interest will vary significantly depending on the length of the construction period, the absorption rate, the initial borrowing rate, the borrowing rate during the project, the presence or non-presence of builder deposits, if applicable the terms of seller financing and whether or not there are real estate options. The model takes these variables into account and calculates the interest cost for the project.
In the sample project the beginning bank loan balance is $309,400, remaining the same during the five month construction and holding period. The interest rate trends upward starting at 6 percent for year 1 and then 7 percent for the remaining years. The interest on the seller loan of $300,000 begins in month number 1 and ends in month number 60.
The monthly interest costs for the bank loan and the seller loan per year and per phase are calculated in interest calculation table. See screen shots of portions of the table below.
The "Snip-It" below is illustrative of the Interest Calculation page from Versions 1, 2 and 3. Page links have been reomoved in current version 4.
As is the case with any of the model's output pages, the interest calculation page can be printed. Click on the links below to go to any of the model output pages.
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