Development Finance Calculator

Development finance calculator measures property development profitability factoring land cost, construction, finance costs, and selling fees. Industry rule: target 20%+ profit on cost (PoC) or 17%+ profit on GDV. Below 15% PoC: deal too tight given execution risk.

Example: 500k land + 1M build = 1.5M total cost. 2.2M GDV. 100k finance cost over 18 months. 110k selling costs (5%). Total project cost 1.71M. Profit 490k. PoC = 28.7%, PoG = 22.3%. Strong development metrics. Most failed developments: insufficient buffer for delays/cost overruns plus optimistic GDV assumptions.

Development finance structure: typically 65% of project cost, drawn down in stages aligned with construction milestones. Rates 6-12% (much higher than mortgage). Term 12-24 months. Mezzanine finance available for higher LTC (up to 90% combined). Costs: arrangement fees (1-2%), exit fees (1-2%), interest, legal/professional fees. Always model worst case: 6-month delay + 20% cost overrun + 10% GDV reduction. If still profitable: solid deal. If losses: too much risk.

Run it with sensible defaults

Using land cost of 500,000, build cost of 1,000,000, finance rate of 8%, finance term of 18 months, the calculation works out to 473,000.00. The defaults are meant as a starting point, not a recommendation.

The levers in this calculation

The inputs — Land Cost, Build Cost, Finance Rate %, Finance Term (months), and Gross Development Value — do not pull with equal force. Not every input has equal weight. Adjusting one input at a time toward extreme values shows which ones move the result most.

How the math works

Profit = GDV - all costs (land + build + finance + selling fees).

Why investors run this

Most people's intuition for compounding is wrong — not because the math is hard, but because linear thinking doesn't account for curves. Running numbers through a calculator like this one is the cheapest way to recalibrate that intuition before making an irreversible decision about contribution rate, asset mix, or retirement age.

What this doesn't capture

Steady-rate math ignores real-world volatility. Actual returns are lumpy; sequence-of-returns risk matters most in drawdown; fees and taxes drag on compound growth; and behaviour changes in drawdowns can reduce outcomes below the projection. The number represents one scenario rather than a forecast.