Land Entitlement Premium Calculator

Entitlement risk is priced into raw land discount to entitled land.

Raw land cost

Entitled land value

Entitlement cost

Entitlement months

Probability of success %

Expected net premium

$2,350,000

Gross entitled premium

$7,000,000

Net premium if successful

$5,500,000

How the math works

Gross = entitled − raw. Net = gross − entitlement cost. Expected = net × success − cost × failure.

($12M − $5M) − $1.5M = $5.5M net. × 55% − $1.5M × 45% = $2.35M expected entitlement premium.

How to Use

Enter raw land cost.
Enter entitled land value.
Enter entitlement cost total.
Enter entitlement months.
Enter probability of success %.
Read expected entitlement premium.

Frequently Asked Questions

How much does entitlement add?

Typical raw-to-entitled premium: 30-200%+ depending on difficulty and upzone. Urban infill rezoning: 50-150% premium. Suburban commercial rezoning: 40-90%. Rural to density: 100-300%+. Deep brownfield cleanup + entitlement: 200-400%. Return premium reflects the risk: most speculative raw land deals fail entitlement, and sponsors account for attrition when pricing. Target land underwriting: 25-35% IRR on entitled land sale to reflect binary risk.

What's the probability of success?

By market: Tier 1 growth cities (Nashville, Raleigh, Austin): 50-70% success. NYC outer boroughs: 30-45%. San Francisco: 15-30%. Conservative suburban: 40-60%. By project type: by-right density increase in pro-development jurisdiction — 80-90%. Major upzone with community opposition — 20-40%. Historic district adjacent — 10-25%. Track records matter hugely — experienced entitlement sponsors achieve 2-3x the success rate of first-timers.

How do speculators price risk?

Expected entitled value × probability = risk-adjusted entitled value. Then discount by entitlement time at cost of capital. Then subtract entitlement cost. That's theoretical maximum price. Most speculators offer 40-60% of that ceiling, giving themselves a 'fair return for taking the risk.' Strong bids at 70-80% suggest the buyer has insider information or specific upzone capability not available to others.

How do JV structures share this?

Common: land seller contributes land at as-is value, sponsor takes on entitlement risk. If successful, land seller gets basis back + 20-40% of uplift (often through promoted interest). If fails, sponsor loses equity. This aligns incentives: sponsor works to entitle, seller participates in upside without taking execution risk. Terms depend on seller sophistication; small sellers often accept less than market-value structure.