Updated
Lot takedown financing connects development spending to the builder purchases that repay the loan. A monthly model should show when costs are paid, when advances arrive, how deposits are credited and what each sale must repay. The free calculator below estimates peak debt and cash shortages under explicit assumptions. It does not establish a loan amount, approval or pricing. Jaken Finance Group reviews actual A&D structures case by case.
Put the construction and purchase calendars together
A development schedule can look reasonable until it is placed beside the purchase agreement. The contractor may expect to finish in ten months, while the builder’s first payment depends on acceptance, notice periods or delivery of a particular group of lots. Those conditions determine when the project receives cash.
Start with the actual agreement and the current cost-to-complete budget. List the expected month for each construction payment and each lot purchase. Identify the event that allows a purchase to occur. If a date is conditional, keep that condition visible beside the forecast.
The online calculator uses two purchase batches and equal construction installments to make an initial review approachable. A project with uneven earthwork, multiple price groups or many takedowns needs more detailed scheduling. Use the editable workbook to examine the mechanics, then provide the actual contract and cost calendar when requesting financing.
Distinguish commitment, advances and outstanding debt
The commitment is the maximum amount the facility makes available under its terms. An advance is a disbursement. Outstanding principal is the amount already advanced and not repaid. All three figures matter, and they are not interchangeable.
Suppose a lender commits $3.6 million, advances $2 million and receives a $600,000 principal payment from early sales. Outstanding principal becomes $1.4 million. Whether any of the repaid money can be borrowed again depends on the agreement. It cannot be assumed merely because the balance is below the commitment.
This calculator uses a non-revolving facility. It tracks cumulative advances separately and never restores availability after repayment. It also stops advances at the modeled maturity. If costs continue beyond that point, the cash schedule shows the resulting need for another source.
The distinction is useful when asking for financing. State whether your requested amount is the total commitment or anticipated peak balance, and provide the draw and repayment schedule supporting both figures.
Calculate the remaining development budget once
Enter the site-work budget before contingency and the separate contingency percentage. The model adds that allowance to site work, then adds remaining soft costs. Those costs are spread evenly across the construction months selected.
Do not add contingency twice. If a contractor’s figure already includes it, separate the components or set the additional allowance appropriately. Similarly, distinguish unpaid work from expenses already funded before the modeled loan closing. A historical expenditure may belong in total economic project cost without being a future cash payment.
Closing and financing fees are paid at the outset in this simplified model. Other carrying costs are charged monthly through the last modeled construction, purchase or debt obligation. Enter actual loan fees and expenses when known, rather than treating the example as a quote.
Projects with deposits to suppliers, uneven utility payments or delayed reimbursements should use a more detailed draw schedule during underwriting. Equal installments are a transparent starting assumption, not a prediction of how a civil contractor will bill.
Keep deposit receipts and credits visible
The full builder deposit is credited proportionally against lot prices in this model. Only the portion entered as available at loan closing becomes initial cash. The rest is treated as escrow released proportionally as lots sell.
For a hypothetical 40-lot project, a $960,000 deposit creates a $24,000 credit per lot. If half of the deposit remains in escrow, the modeled escrow release is $12,000 per lot. A sale therefore shows the gross purchase price, the full credit and the separate escrow release before selling costs.
This presentation prevents a common double count. Adding both the full contract price and an already credited deposit would overstate receipts. Deducting the full credit while overlooking an escrow release would understate them. The correct treatment comes from the agreement and actual account records.
If your deposit applies only to the final batch, is refundable under specified conditions or cannot be released proportionally, explain that difference when submitting the project. The capital-source guide discusses the documentation needed to reconcile it.
Understand the interest convention
The calculator assumes advances occur at the beginning of each month and repayments occur at month-end. Monthly senior interest equals principal outstanding after that month’s advance multiplied by the annual rate divided by twelve. The commitment itself does not generate modeled interest while undrawn.
Actual loan documents may use daily accrual, different day-count conventions, minimum interest or other charges. A financing comparison should reflect those terms. The rate in this tool is an editable hypothetical assumption and is not an offer from Jaken Finance Group.
Interest is paid from project cash in the model. If the proposed facility funds an interest reserve at closing, include the funded amount in the initial advance and explain its intended use. That advance increases both debt and available cash. Do not also subtract the same reserve as a separate cost and then charge the monthly interest again without reconciling the treatment.
The OCC’s commercial real estate lending handbook discusses interest reserves in development lending. Its supervisory guidance does not establish the terms of your proposed facility.
Read the four main results together
Peak senior debt is the highest modeled senior balance before a month’s repayment. Additional cash needed is the largest negative cash position, including the point after costs and interest are paid but before sale proceeds arrive. Project profit is contract revenue less the modeled economic costs. Senior interest is the total interest calculated over the schedule.
None of these results replaces the others. A project with a positive profit can have a large cash shortage at loan maturity. A project with no modeled cash gap may still have unacceptable contract, collateral or execution risks. The tool does not evaluate those matters.
Use the detailed schedule to understand a result before changing assumptions. Identify the exact cost, purchase or payoff that creates the shortage. That gives the financing discussion a concrete question to resolve.
YOUR LOT DEVELOPMENT MODEL
Follow the money through each takedown.
Start with this hypothetical 40-lot example, then enter your assumptions. All results are available without an email.
Additional cash needed includes costs paid before month-end sales. Negative cash is an unfunded gap; it is not an assumed loan advance.
Base and downside
The downside delays both purchases, increases remaining hard and soft costs, and lowers sale prices. Loan and seller-note maturities stay fixed.
| Result | Base | Downside |
|---|
Monthly cash and repayment schedule
| Month | Cost | Draw | Interest | Lots | Sale cash | Senior paydown | Seller payoff | Senior balance | Cash before sale | Ending cash |
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Calculation method and limits
Remaining hard costs, contingency and soft costs are spread equally over your construction months. The proposed draw share applies to those costs. Advances stop at the commitment or maturity. This is a non-revolving facility: repayment never restores availability.
Senior interest uses the balance after the month-start advance, before month-end repayments, at annual rate divided by twelve. It is paid from cash. Include any funded interest reserve in the initial advance. Seller interest accrues simply until its payoff month.
The entire builder deposit is credited pro rata against lot prices. Only the available portion enters cash at closing; the rest is released from escrow with each sale. Actual escrow restrictions and release prices may differ. Carry continues through the last modeled obligation. No tax, lender eligibility decision, appraisal or contract interpretation is calculated.
Peak LTC here is peak senior balance divided by modeled total economic cost, including original land cost, remaining work, selling costs and financing carry. A lender may use another eligible-cost denominator. Assumed accepted land equity is shown separately and never creates spendable cash.
Keep an editable A&D workbook
Get the formula-driven monthly schedule, capital-source reconciliation and project summary. Preview the workbook. Calculator entries stay in this browser unless you choose to include them in a project inquiry.
Follow a hypothetical first takedown
The starting example has 40 lots at $160,000 each. Sixteen sell in month eight and the remaining 24 in month sixteen. The deposit is $960,000, with $480,000 available at closing and the balance released proportionally from escrow. Selling costs are assumed at 2% of gross proceeds.
The first batch produces $2,560,000 of gross sales. Subtract $384,000 in deposit credits and add $192,000 of escrow release. After $51,200 of selling costs, cash receipts are $2,316,800. These amounts are arithmetic illustrations, not expectations about any actual property.
At a proposed release payment of $110,000 per lot, that batch requires $1,760,000 of senior principal repayment, subject to the balance actually owed. The remaining sale cash stays in the project calculation to support other costs and obligations. No distribution to the sponsor is assumed during the schedule.
Change the release amount and observe the effect on remaining debt, future interest and cash. The required payment in a real transaction is a negotiated loan term, not a number the sponsor can change unilaterally.
Check the cash position before the sale closes
Monthly ending cash can conceal an important timing problem. Suppose a project starts a month with $50,000, receives a $200,000 draw, spends $300,000 and then closes a lot sale that brings in $150,000. Ending cash is positive, but the project was $50,000 short before the sale.
The calculator checks that intermediate position. Its schedule includes a cash-before-sale column, and the additional-cash result includes the lowest value there as well as closing and month-end positions. This makes the liquidity requirement more visible than looking only at month-end totals.
The model still groups activity into months. If a draw arrives after payroll or a closing moves by several days, a weekly or daily schedule may be necessary. Provide the expected reimbursement process and critical invoice dates when requesting a review.
A negative cash position is not treated as an overdraft or automatic borrowing. It is a gap requiring a permitted, available source. The forecast continues mathematically so you can see later receipts, but those later receipts do not remove the earlier need.
Keep maturity fixed in a delay scenario
The downside controls move both builder purchases later, increase remaining hard and soft costs, and reduce sale prices. They leave the senior and seller maturities unchanged. This is deliberate: an extension is a separate agreement, not a consequence of moving a date in a spreadsheet.
In the starting example, delaying the final purchase by three months moves it from month sixteen to month nineteen. Senior maturity remains month eighteen. The model therefore pays the remaining senior balance at maturity from project cash, even though the last batch has not yet sold.
That scenario can show a substantial financing gap while final project profit remains positive. The result identifies a timing problem rather than proving the development has no economic value. Possible responses need review: an agreed extension, earlier purchases, additional equity or a different financing structure.
Do not solve the spreadsheet by silently extending the loan. Show the current terms first, then model the proposed extension as a separately labeled assumption once its cost and conditions are understood.
Include the seller note and its accrued interest
The seller note remains outstanding until the payoff month selected. Interest accrues using a simple annual rate divided by twelve. The entire principal and accrued interest are paid in that month. The online model does not assume current seller payments or compounding.
If the actual note has periodic payments, a different accrual method or a changing balance, provide the schedule for a more detailed review. The senior documents may also restrict when seller payments are permitted. Entering a payoff month in the tool does not establish permission to make that payment.
Peak combined debt includes outstanding senior principal and the seller balance with modeled accrued interest. It is separate from secured combined loan-to-value. An unsecured seller note can affect cash and total debt without being a property lien.
Review what happens when the note matures before the last builder purchase. As with senior maturity, the model shows the cash demand on the stated date. A proposed standstill or extension should be documented and considered separately.
Interpret profit and final cash correctly
The economic budget includes documented land cost, remaining construction and soft costs, contingency, closing fees, carry, financing interest and selling costs. The projected profit is total modeled sale revenue less that budget, before income taxes and owner distributions.
Ending project cash is different. It includes the original cash introduced and the cash remaining after financing and repayments. It can therefore exceed project profit. It should not be described as profit without reconciling the return of capital and the original land contribution.
Principal repayment appears in the cash schedule but is not counted again as an economic construction expense. The financed land or work is already included in the project budget. This separation prevents both overstatement and understatement of the project’s economics.
The model assumes all scheduled lots sell within the horizon and does not calculate a residual value for unsold inventory. It is designed for the stated two-batch scenario, with known lot counts and explicit assumed prices. More complex projects require a tailored schedule.
Use the results to ask better financing questions
Save the base case before changing assumptions, and retain a dated workbook copy when discussing the project with partners. Identify the peak balance, the largest cash need, the key maturity dates and the contract conditions behind the expected receipts.
Your financing request should explain how those numbers connect to the proposed commitment. It should also identify costs or rights the model cannot evaluate: appraisal conclusions, buyer remedies, municipal acceptance, title issues and guarantee scope. The project packaging guide helps organize the supporting documents.
Download the editable A&D workbook if you want to retain the formulas and monthly schedule. Printing the results is free. To discuss an actual transaction, request a project review and choose whether to include your saved calculator assumptions. Jaken Finance Group will assess the proposed structure individually rather than treating the model’s results as approved terms.