A free residual land valuation template, with the four tests that make it a decision
Gross development value less costs and required profit gives the land price. Then the template moves costs, time and value, reverses the calculation and runs the monthly cash flow to peak debt.
A residual appraisal is a small difference between two large numbers. In the worked scheme a value of 100 and costs of 78 support a land price of 6.4. Raise construction by 8.1% and the land value falls 78%, to 1.4. Put three ordinary adverse movements together and it is -7.1: the scheme supports no land price at all. This template computes the residual and then shows how fragile it is.
Download the template
One Excel file, no macros, nothing locked. No account, no email address.
The required profit is held at its appraised amount, because it was set as payment for the risk, not as a residual of it.
Test
Land value
As appraised
6.4
1. Construction cost rises 8 per cent
1.4
2. Programme extends nine months
2.9
3. Value falls 5 per cent
1.4
4. All three together
-7.1
Presented alone, 6.4 looks like a price. Presented with these four lines, it is a price with no margin for anything going wrong,
and the right responses are visible: pay less, pre-let, fix the construction price, or ask for a higher return.
What is in the file
The residual
The appraisal, the instability shown in one line of arithmetic, and the four tests.
Reverse and resilience
The calculation run backwards: what the assumptions must be for the land price on the table to work, plus the cost overrun and value fall the scheme can absorb.
Cash flow and peak debt
Month by month: the peak debt, how long it is held, and what a six-month delay actually costs, which a summary appraisal buries in one finance line.
Checks
Every figure tested against the book, each with a verdict.
How to use it
Replace the blue cells on The residual with your scheme: value, the cost lines, the profit requirement.
Read the four tests before the land value. If test 4 is negative, the price has no margin.
Use Reverse and resilience when a vendor names a price: it tells you what you would have to believe to pay it.
Take peak debt from the cash flow sheet, not from the summary: it is what the lender and the equity have to fund.
Questions people ask about it
What is a residual land valuation?
The value of the completed scheme, less every cost of building it and the developer's required profit. What is left is what the land can be worth to that scheme.
Why is the residual so sensitive?
Because it is the small difference between two large numbers. A few per cent on value or costs moves the land value by tens of per cent.
Profit on cost or profit on value?
The template takes profit as a share of cost excluding land, and shows what the other convention does to the same scheme.
Is it free?
Yes, with no sign-up. It is a companion file to a book on development management.
The rest of the files
This template is one of the companion files for The Real Estate Development Manager: the full set adds
the land and cost plan, the pre-letting decision, the risk register and a fully worked scheme. Free, like this one.
Sale and leaseback modelNine buildings, the price split five ways, rent cover on the entity that signs.
This template comes from The Real Estate Development Manager. The book is on Amazon.
If this book helped — or didn’t — a few lines on Amazon are worth more than they look: they are what the next reader goes on. Write a review. The template stays free either way.