Guide · Entitle
Land entitlement: what the approval is worth
Entitlement turns raw land into approved lots or units. The value is created by the approval, so the questions are what an approved unit sells for, what the approval costs, and how long it takes.
Residual land value
What a buyer of approved units can pay, less the cost of the approval and a fair return, is the most the land is worth to you today. The app shows the headroom between that and the asking price.
Multiple and annualised return
Multiple on invested capital (1.80x default) is the hard gate. The annualised return (25% default) shows what the hold does to it.
Time is the risk
Past 24 months an approval timeline is a risk, not a plan: carry costs build and the market can turn before the lots are sold.
The tests
| Test | Default bar | Kind |
|---|---|---|
| Profit at approval | above zero | Hard gate |
| Multiple on invested capital | 1.80x minimum | Hard gate |
| Residual land value over price | pay $120,808 or less | Target |
| Annualised return | 25% minimum | Target |
| Return on cash in | 30% minimum | Target |
| Time to approval | 24 mo or less | Target |
Default targets for an experienced sponsor. Every bar can be changed in Settings.