Let’s assume the home plans are likely to average about 2,200 square feet of finished space, for a total of 110,000 square feet of finished built space project-wide. A finished home in this subdivision could be expected to command base prices generally ranging in the high $300,000’s. However, after taking into account estimates and allowances for premiums on choice lots, customer-selected options and upgrades, we can assume that the houses reach an average sale price of $400,000 per unit, ultimately generating around $20 million in gross sales revenues. After factoring in an estimate of about $800,000 for legal fees, closing costs, and other “transactional” costs, the net project revenue comes out to $19,200,000.

We can assume that the price of land is about $50,000 per home which would total $2,500,000 for all 50 units. Then, we estimate an additional $75,000 for broker and legal fees, closing costs, and taxes, making the total price for the land acquisition $2,575,000. Once the land is acquired, the planning phase for the project begins and this requires the developer to work with surveyors, planners, architects, civil engineers, environmental specialists and traffic engineers; I estimated the cost of this to be about $600,000. Next, we estimate the project’s site work and building costs; these are highly variable and depend on the specific conditions of each site. This is the part of the project where the developer must consult a number of different experts, such as architects, engineers, construction managers, etc., in order to move forward with physically building the houses. Let’s assume the site work costs are $2,850,000 and that the base construction cost is $65 per square foot, once the customer-selected options and upgrades are taken into account, we can estimate our total building costs to be roughly $8 million. However, it is required to pay for permits and inspection fees and other finishing costs (landscaping, hooking up water and sewers, etc.), therefore, our total building cost is estimated to be $12,175,000. Due to the size of this hypothetical project, I estimated only $100,000 to account for amenities and off-site costs such as playgrounds and walking trails, however, larger developments may opt for bigger/more expensive amenities like clubhouses, plazas, pools, etc. Management and overhead costs refer to all of the individuals such as site production managers, site supervisors, sales managers, and sales and clerical staff, administration, office expenses, and central administrative services that the developer has incurred throughout the entire development process; and for this I estimated about $1,760,500. In the end, our final project cost is estimated to be about $17.2 million.