My boss always says it's beneficial to us as developers if land owners are willing to contribute their land into the deal as equity vs paying cash outright. Is there really any difference to project IRR and multiple whether the land is contributed or paid for (same month in both scenarios)? I would think total development cost would remain unchanged.
If I'm mistaken, can someone help me understand the intricacies of modeling the contribution as equity? I typically handle this on the waterfall tab and keep track of Land guys returns (and all other equity investors) once I've solved for the project level levered return prior to this point. If the land contribution DOES affect the project level IRR, then I'm certainly modeling the deal incorrectly.