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Density Bonus Yield Calculator
Density bonuses trade affordable units for market-rate upside.
Net annual income uplift
$588,000
Bonus units income
$840,000
Affordable rent discount
$252,000
How the math works
Bonus income = bonus units × market rent × 12. Discount = affordable × (market − affordable) × 12.
25 bonus × $2,800 × 12 = $840k + 15 affordable × ($1,400 gap) × 12 = $252k disc. Net $588k uplift.
How to Use
- Enter as-of-right unit count.
- Enter bonus unit count.
- Enter affordable unit count.
- Enter market-rate rent.
- Enter affordable-rate rent.
- Read net annual income uplift.
Frequently Asked Questions
What's a density bonus?
A regulatory tool that lets developers build more units than base zoning allows — typically 15-35% more — in exchange for providing affordable units. Program specifics vary: CA SB 35, SB 9; NYC 421a/485x; Maryland MPDU; Montgomery County IZ. Typically 10-25% of new units must be affordable (income-restricted for 30-99 years). Net value usually positive for developer because market-rate upside exceeds affordable discount at scale.
Economics of the trade?
Example: 100-unit base → 125-unit bonus with 15 affordable at 60% AMI. New 25 market units × $30k/year × $400k value per unit = $10M uplift. Affordable units rent discount: 15 × $12k/yr rent gap × 30 years ≈ $5.4M present value discount. Net: $4.6M value uplift. Plus construction efficiency (shared lobby, elevator, etc. spread across more units). Typical density bonus creates 10-25% land value uplift.
When don't density bonuses work?
Markets with thin rent premium over affordable rent: $100/mo market vs $700/mo affordable = barely breaks even. Markets with already-dense base zoning (Manhattan mid-blocks): bonus barely increases density. Short affordability periods (10-year) aren't worth less for market; 99-year terms are punitive. Running the math before opting in is essential — density bonuses aren't always pro-developer.
How do you execute?
(1) Architect of Record models base vs bonus scheme early. (2) Housing finance attorney reviews affordability compliance. (3) Local planner familiar with specific bonus program. (4) Regulatory agreement (RA) with municipality before building. (5) Monitoring entity (often non-profit or municipal housing finance agency). (6) Income-verification process for tenants. Sponsors underestimate the ongoing compliance overhead: $50-150k/year for large projects.
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