Use this land and spec-margin calculator to see whether a scrape, infill lot, or small spec stack clears the two rules that govern investor construction at Jaken Finance Group: land-only leverage at 50%–65% of as-is land value, and a vertical loan equal to the lower of cost and 75% of as-completed value. Interest-only carry sits inside 8.99%–13.5%.
Product paths: vacant land loans · infill lot financing · A&D loans · spec / BTR
Land & spec-margin calculator
Size land leverage (50%–65%), all-in cost, interest reserve, and the lower of cost vs 75% of as-completed value. Estimates only — not a loan offer.
All-in cost
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75% of as-completed
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Max vertical loan
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Cash / equity gap
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Land-phase max loan
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Est. interest reserve
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Gross margin vs ARV
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What “all-in” must include
Sponsors understate soft cost and carry. The calculator forces the common lines into one stack:
- Land / lot basis — purchase or as-is value of the dirt
- Horizontal / demo / site — scrape, haul-off, streets, utilities, soil
- Vertical hard cost — the building
- Soft costs — plans, permits, taps, insurance, GC fee if not in hard
- Contingency — typically 10%–15% of hard + horizontal
- Interest reserve — months of IO on the average drawn balance
Bonds, impact fees, and capacity charges are often cash. If you cannot finance them, they still widen the equity gap. Put them in soft cost or accept a larger cash check.
Land phase vs vertical phase
Until vertical is real, the collateral is dirt. A scrape with no rebuild plan is a land file. A tract with streets and a plat path is often A&D. A legal lot with house plans is construction.
Land-only max loan = land basis × (50%–65%). That number does not jump because you hired an architect. When vertical draws start, the facility sizes to the lower of all-in cost and 75% of as-completed comps in the same product.
When the 75% cap binds — and why slogans fail
Marketing says “up to 90% LTC” or “up to 100% on qualified files.” Both still sit under the as-completed cap. If all-in is $640,000 and as-completed comps support $780,000, then 75% of value is $585,000. The loan that can close is $585,000 — not 90% of $640,000.
Expensive urban lots relative to the house you can legally build are the usual bind. Luxury finish on a thin buyer pool binds even harder — use luxury new construction for $900K–$2M+ as-completed files, not this standard-margin screen.
Worked example A — scrape-and-rebuild (calculator defaults)
| Line | Amount |
|---|---|
| Land / lot | $185,000 |
| Demo / site | $42,000 |
| Vertical hard | $310,000 |
| Soft | $38,000 |
| Contingency 12% | ~$42,000 |
| As-completed | $780,000 |
| Rate / months / avg drawn | 10.5% IO · 10 mo · 60% |
Run the widget: all-in after reserve sits near the mid–$600Ks; 75% of $780,000 is $585,000. When the cap binds, the cash gap is the story. Cut cost, find better comps, or bring equity. Narrative twin: infill lot development financing.
Worked example B — entitled pad into a small vertical
Land basis $420,000 (already owned), horizontal $0 (pad ready), vertical $1,860,000, soft $210,000, contingency 12%, as-completed $3,400,000, rate 10.5%, 14 months, 55% average drawn.
Cost before reserve is already large. 75% of $3.40M is $2.55M. If all-in exceeds that, the same rule applies as the 12-unit garden example — the value cap wins. See 12-unit garden construction example and multifamily construction loans.
Sizing the interest reserve without lying to yourself
Interest is charged on the drawn balance. A reserve of “six months on the full commitment from day one” overstates early carry and understates peak-draw months. The calculator’s average-drawn percent is a screening shortcut. For a term sheet, map months to gates: foundation, structure, MEP, finish.
Northern winters, historic demo delays, and tap-fee waits add months. Add them to the reserve calendar before you cut equity to “make the deal work.” A&D takedown timing: A&D loans. Stalled vertical: mid-construction refinance.
Gross margin vs a lender’s loan
Gross margin (as-completed minus all-in) is a sponsor screen. It is not the loan amount. A 20% gross margin can still need a large cash check if the 75% cap binds. Sale costs, carry overrun, and concessions eat margin after CO. Leave room.
For retail sale exits, stress days-on-market. For rental exits, model DSCR at 5.75%–10.5% on the permanent payment — not construction IO.
Authoritative cost and start data
National start and completion trends from the U.S. Census Bureau new residential construction releases help you sanity-check absorption stories. They do not replace local comps. Your as-completed value must come from sales or leases in the same product and grid. A national headline about starts rising does not make a thin comp set on your block into a loan. Underwrite the street you are building on, not the census release.
Contingency that has to survive Gate 3
A 5% contingency looks efficient in a pitch deck and dies at soil correction. Construction files that survive use 10%–15% of hard and horizontal work. Change orders need paper before the next draw increases. If the contingency is gone at dry-in, the next conversation is often mid-construction refinance, not a polite upsize.
Infill, A&D, and multifamily — which inputs to use
- Infill scrape — put demo in horizontal/site, house in vertical. See infill lot financing.
- Small plat / A&D — land basis plus horizontal streets/utilities; vertical may be zero until lots release. See A&D loans and subdivision financing.
- 5–20 unit garden — pad basis in land, building in vertical, as-completed from unit comps. See multifamily construction loans.
Do not average a garden sale and a luxury custom listing to invent as-completed value. Comps must match the product you are building. Chicago teardown economics for one metro: Chicago infill teardown economics.
Sale costs and hold after CO
Gross margin before sale costs is not profit. Commission, concessions, and extended listing days on a slow luxury or thin-comp street eat the spread. If the exit is a rental hold, model DSCR on the amortizing payment at 5.75%–10.5% with realistic vacancy — use the DSCR calculator beside this one.
Draw curve vs average-drawn percent
The reserve slider assumes a flat average drawn percent. Real jobs are lumpy. Land may fund at close. Foundation is a smaller share. Framing and MEP push the balance up fast. Finish draws are smaller again. If your civil or GC schedule front-loads cost, raise the average-drawn percent or add months. If the job is slow and lightly drawn for half the term, you can lower it — but only with a written schedule.
Spec and BTR builders should also stress sell-out or lease-up after CO. Interest does not stop the day the inspector signs the last gate. Pair this tool with the spec / BTR financing page for takeout paths.
First-time builders and GC capacity
A clean calculator result does not replace a licensed GC who has delivered this product. First-time sponsors can clear when plans, budget, and GC are real — see ground-up construction with limited experience. First-time sponsors with a rendering and a max-leverage request on raw land do not clear, no matter what the margin line shows.
Horizontal bonding and why land LTV stays tight
Finished lots are not raw acreage. Until the city accepts streets or bonds are posted, leverage stays in the land band. Bonding and lot-release mechanics: horizontal costs and bonding. Entitlement path: entitlement and platting. Use the land-phase max loan output as a ceiling for dirt-only pieces, not as the vertical commitment.
Soft costs sponsors forget
- Tap and capacity fees due at permit, not at CO
- Course-of-construction insurance vs vacant-lot liability after demo
- Soil, compaction, and abandoned-line video between demo and foundation
- Tree surveys, rodent reports, and fencing plans some cities require before scrape
- Impact fees and school fees that do not appear in the GC bid
Put them in soft cost or they will show up as a cash call. The calculator’s equity gap line is where those surprises land if you omit them from the stack.
Comparing flip rehab vs scrape
If as-completed comps for a new house do not clear 75% of a realistic all-in, a heavy rehab may beat a scrape. Run the fix and flip calculator on the rehab path and this tool on the scrape path with the same as-completed set. Choose the loan that matches the work — do not force a teardown the block will not pay for.
MAO screening on flips: 70% rule / MAO calculator. Hard money product overview: what is a hard money loan.
Stress tests worth running before you offer
- Raise contingency to 15% and add two reserve months — does the gap explode?
- Cut as-completed value 8% — does the 75% cap suddenly bind?
- Raise the rate to 12.5% inside the published band — can you still carry peak draws?
- Set land LTV to 50% — is the dirt piece still financeable if hearings slip?
If any of those four breaks the deal, the spreadsheet was too optimistic. Fix the budget or walk. A term sheet cannot repair a margin that only exists at perfect inputs. Sponsors who only stress the happy path discover the gap at commitment committee — after attorney fees and a rate lock mindset that no longer matches the dirt.
Luxury and jumbo forks
When as-completed targets $900,000 to $2 million-plus, build times stretch and the buyer pool thins. Leverage often sits at 80%–88% of cost on qualified luxury files and still under the 75% value cap. Use luxury new construction and jumbo hard money for that box. This calculator remains useful as a margin screen, but the product page and LTC story change. Collar and DC luxury depth on those hubs; do not force a luxury finish into a standard infill loan amount. When in doubt, match the facility to the finished buyer pool first.
Using the embed
Partners can embed the widget at /embed/land-spec-margin-calculator/. Keep the full teaching page linked so sponsors see why the value cap binds and how land leverage differs from vertical. The embed is for quick screening; the term sheet still needs a draw schedule, comps, and a GC who has delivered the product you modeled.
How Jaken Finance Group underwrites these stacks
We finance business-purpose investment property only. Credit is reviewed. Approval rides on survey, permit path, budget, GC, comps, and exit — not on a W-2 story. Qualified construction and bridge price at 8.99%–13.5% interest-only. Close targets 10–14 business days when the package is complete.
Starting point across build types: new construction loans for investors. Apply: new construction application · submit a scenario · (833) 264-7776.
Package checklist
- Purchase contract or deed, survey, entity docs
- Demo or horizontal bid and permit status
- Plans, line-item budget, GC contract
- Tap / will-serve or fee estimate
- As-completed comps in the same product
- Reserve calendar that follows the draw curve
- Exit: sale timeline or rent roll for DSCR
Related calculators
- Fix and flip calculator
- 70% rule / MAO calculator
- MHP loan calculator
- DSCR calculator
- All calculators
Embed: Land & spec-margin embed
Calculator outputs are educational estimates only. Rates, terms and conditions offered only to qualified borrowers and are subject to change without notice. All loans are subject to full underwriting. Jaken Finance Group only finances non-owner occupied investment properties.