Real Estate Development
Question for people in development, how do you make land pricing recommendations for a potential acquisition? After finding the cost of the project you are trying to build.
You can figure out what YOU are able to pay for the land by backing into the residual land value based on your desired return metric (typically IRR) - what I mean by that is you'd have an input for the land cost and use goal seek to set it equal to an amount that results in your return metric being equal to X, where X is your minimum return threshold for a deal to pencil. That's your maximum purchase price under your assumptions.
From there you can gauge that against what market rates are for that type of land and see if there's some wiggle room for savings (hint: if there isn't you probably shouldn't buy it).
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