Subdivision Profit Rechner — Formel

Subdivision Profit Analysis

Subdivision development involves purchasing raw land, improving it with infrastructure, and selling individual lots to builders or homebuyers.

Formula

Net Profit = Gross Revenue - Development Cost - Selling Costs - Carry Costs

Absorption Rate

The absorption rate (lots sold per month) is critical because it determines how long your capital is tied up and how much you spend on carrying costs. A faster absorption means:

  • Lower total carry costs
  • Faster return of capital
  • Reduced market risk

    • Target Returns

  • Most developers target 15-25% profit margin on gross revenue
  • ROI of 20-40% on invested capital is typical for successful projects
  • Higher risk projects (uncertain entitlement, longer timelines) need higher target returns

    • Phasing Strategy

    Larger subdivisions are often developed in phases to reduce risk and capital requirements. Revenue from early phases helps fund later phases.

    Lösungsbeispiel

    $1,500,000 total development cost, 25 lots at $85,000 each, 6% selling costs, 24-month absorption, $8,000/month carry costs.

    1. Gross revenue: 25 x $85,000 = $2,125,000
    2. Selling costs: $2,125,000 x 6% = $127,500
    3. Carry costs: 24 x $8,000 = $192,000
    4. Total costs: $1,500,000 + $127,500 + $192,000 = $1,819,500
    5. Net profit: $2,125,000 - $1,819,500 = $305,500
    6. Profit margin: $305,500 / $2,125,000 = 14.4%
    7. ROI: $305,500 / $1,500,000 = 20.4%
    8. Absorption rate: 25 / 24 = 1.04 lots/month