Pre Development Cost Recovery Calculator

Pre-dev costs recovered through sale or built-in value at completion.

Pre-dev costs

Success probability %

Profit on success

Exit value if failed

Expected value

$1,760,000

Success net value

$2,750,000

Failure net value

-$550,000

How the math works

Expected value = success net × prob + failure net × (1 − prob).

($3.5M − $750k) × 70% + ($200k − $750k) × 30% = $1.925M − $165k = $1.76M expected value.

How to Use

Enter pre-dev soft costs.
Enter success probability %.
Enter expected profit on success.
Enter exit value if failed.
Read expected recovery.

Frequently Asked Questions

Pre-dev categories?

Acquisition due diligence. Zoning analysis. Architectural pre-design. Environmental study (Phase I/II). Traffic study. Neighborhood engagement. Entitlement legal. Pre-construction scheduling. Typical: 8-15% of projected project cost.

Recovery scenarios?

Success: recovered through completed project (full recovery + profit). Entitled + sold: recovered through land lift (partial recovery). Failed entitlement: lost (full loss). Success probability 50-80% typical for entitlement projects.

Expected value math?

Pre-dev $500k. Success (70% prob): +$2M profit = +$1.5M net. Failure (30% prob): lose $500k. Expected value: 70% × $1.5M + 30% × -$500k = $900k. Positive expected value justifies pre-dev risk.

How often should I rerun this?

Rerun this calculator whenever inputs change materially — new rent roll data, rate moves, loan balance updates, or quarterly operating data. For active deals, monthly refresh is typical. For stabilized assets under monitoring, quarterly is fine. Treat the output as a decision tool, not a one-time answer — market conditions evolve and so should your analysis.