How to do a Land Residual Analysis with Construction and Land loan
Currently doing a case study for an interview and building a model for a condo land acquisition and development.
The case states to do a land residual to find the value of land so that 15% developer profit can be achieved.
I got to the point where I run into the Financing costs for the Construction and Land loan to consider and am in a catch-22 situation. I'm struggling to calculate the financing costs without knowing the loan draw schedule on how much of the land loan the construction loan takes away but can't model the land loan and land amount without calculating the land value. The construction loan given is just a LTV and interest per annum. Was thinking of just using the LTV to calc thr loan amount and do a simple interest calc on top.
Anyone have any experience or ideas on how to tackle this?
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