Finance category

Mortgage, loan, investing, tax, and money calculators.

Browse finance

Predevelopment Burn Gap Calculator

Pre-development burn can deplete sponsor equity before ground break.

Predev cash available

Monthly burn

Permit date month

Financing close month

Runway gap (months)

1.7

Cash at financing

$250,000

Total burn through close

$2,250,000

How the math works

Total burn = monthly × months to close. Remaining = predev cash − total burn. Gap = runway − required months.

$2.5M / $150k = 16.7 months runway vs 15 required = 1.7 months cushion. $150k × 15 = $2.25M burn, $250k left.

Editorial noteMaintained by EveryCalc - Reviewed June 2026

EveryCalc calculators are designed for fast, practical estimates with transparent inputs and no required account. We use plain formulas, visible assumptions, and related tools so visitors can check the result from more than one angle.

Results are informational only. For financial, tax, legal, medical, construction, or other high-impact decisions, verify the output against primary sources or a qualified professional.

Learn more about our review process on the EveryCalc methodology page.

How this calculator works

What this page estimates

This Predevelopment Burn Gap Calculator is built to give a quick, browser-based estimate for predevelopment burn gap. Pre-development burn can deplete sponsor equity before ground break. The inputs stay on the page during normal use, and the result should be treated as an estimate for planning, comparison, or education rather than professional advice.

Calculation approach

The calculator applies the standard relationship implied by the inputs, then formats the answer so it can be checked and reused. For finance tools, the most important step is using consistent units, rates, time periods, and assumptions before comparing the result with another calculator or outside quote.

Example workflow

For example, start with a realistic value you already know, change one input at a time, and watch how the answer moves. That makes it easier to tell whether the result is being driven by the main amount, the rate, the time period, or a unit conversion.

Practical checks

Use current, real-world numbers when the result affects money, health, tax, or legal decisions.
Run a low, base, and high case when the inputs are estimates.
Check the related calculators below when the next decision depends on a different assumption.

How to interpret the predevelopment burn gap result

Best use

Use the result as a planning number for comparing payments, rates, returns, tax reserves, or cash-flow choices before you request a quote or make a commitment.

Cross-check

Compare the answer with the contract, lender estimate, tax form, brokerage statement, payroll record, or invoice that will control the real-world outcome.

Watch for

Do not rely on a single optimistic rate, return, or fee assumption. Money pages work best when you run low, base, and high cases and keep professional advice separate from the estimate.

This page belongs to the Finance calculator library, so the answer should be read in the context of the decision you are modeling rather than as a universal rule.

Before relying on this predevelopment burn gap estimate

Most calculator mistakes come from the inputs, not the arithmetic. Use this short audit before you reuse the answer in a spreadsheet, quote, application, or important conversation.

Confirm source numbers

Match balances, rates, fees, taxes, income, and payment dates against the lender quote, payroll record, tax form, statement, invoice, or contract.

Separate cash flow from total cost

A lower monthly payment can still cost more over time if fees, interest, taxes, or a longer term are hidden in the structure.

Run conservative cases

Test at least one higher-cost or lower-return case before using the output for a purchase, refinance, investment, loan, or tax decision.

Rerun this page when the rate, price, term, fee, tax rule, income, expense, or expected holding period changes.

How to Use

Enter available predevelopment cash.
Enter monthly burn rate.
Enter expected permit date month.
Enter financing closing month.
Read runway vs required months.

Frequently Asked Questions

What's predevelopment burn?

Cash consumed before construction financing closes: land acquisition, deposits, architect, engineer, attorney, consultants, planning studies, community outreach, permits, taxes on land, insurance, development team payroll. Typical $0.5-5M range depending on project size. Large project (250+ unit multifamily): $2-4M predev. Small project (50-100 unit): $0.3-1M. Office/retail development: $1-5M. All sponsor equity (risk capital) — not financeable.

Why does it blow budgets?

(1) Entitlement delays stretch timeline — each extra month burns $20-100k. (2) Architect and consultant scope creep. (3) Unexpected studies required (traffic, environmental, historic). (4) Community benefits negotiation extends timeline. (5) Political opposition (can require multiple rounds of revision). 40-60% of predev budgets are blown. Experienced sponsors buffer 25-40% contingency.

How do sponsors fund predev?

Sponsor equity (most common). Predevelopment loan (rare, expensive — 12-18% rate with take-out financing commitment). LP co-investment (some institutional LPs will co-fund predev alongside sponsor for a pref share). Family office pre-development capital (expensive but patient). Most sponsors personal-fund or use fund reserves. Don't over-commit — predev is the highest-risk capital in the development cycle.

What triggers walk-away?

(1) Entitlement risk materializes (community opposition, design rejection, environmental problem). (2) Market shifts during predev (rent projections drop 15%+, cap rates widen 100 bps+). (3) Cost inflation outpaces budget (2022-2023 saw 15-30% construction cost increases). (4) Runway nearly depleted with unclear next milestone. Smart sponsors walk at $1M in if path-to-close looks unlikely. Amateurs sunk-cost continue at $3-5M in, making it worse.