Land Development Calculator — Free Lot Cost & IRR

Dirt is cheap until entitlements, infrastructure, interest, and a 6% selling cost show up. Cost per lot is the only number a land buyer actually cares about.

Land, entitlements, and infrastructure are the three checks most people forget to add together. A 'steal' on acreage that needs a lift station is not a steal. Lots (or units) divide the basis so you can compare to finished-lot comps. If you are selling raw or finished lots, turn vertical build off. If you are building product on those lots, turn it on and add cost per unit plus soft costs as a percent of that vertical spend.

Hold months and rate create interest on the whole basis. Eighteen months of carry on a two-year entitlement fight will rearrange your return. The simplified IRR is ROI divided by years in the hold — not a full cash-flow IRR with irregular draws. It is a ranking tool. It will not replace an Argus model and it does not try to.

Revenue is lots × sale per unit. Gross profit is revenue minus total basis. Net profit subtracts a 6% selling cost. That 6% is baked in so you stop pretending you will sell twenty lots with a Facebook post. If your true cost to sell is different, haircut sale per unit until net looks like your world.

Cost per lot is total basis / lots. Put that next to the last finished-lot sale in the school district. If you cannot win that comparison, you are manufacturing lots the market can already buy cheaper from someone who entitled them last cycle.

Toggle vertical off to see whether the dirt itself works. A lot of 'development' deals only work if you also capture builder margin. That is a different business and a different risk. Know which one you are in before you wire the option fee.

Pair this with new construction when you keep the vertical. Pair it with commercial when the exit is a leased building rather than lot sales.

The identities

Total = Land + Entitlements + Infra + Build + Soft + Interest
Net = Revenue − Total − 6% selling

Simplified IRR = ROI% / max(hold years, 1/12). Selling cost is 6% of revenue.

How people blow the result

• Ignoring off-site costs the city will make you build.
• Using retail home prices as lot values.
• Assuming a one-year hold on a rezoning.

FAQ