The Residual Valuation

Land value, build cost, developer profit and planning risk

In a refurbishment you start with a price and work forwards. In a development you start with the finished scheme and work backwards to discover what the land is worth to you. This book teaches that method, the residual valuation, on which every development stands or falls. It picks out the numbers that matter, shows where to find the most important ones for free, and warns that the gross development value is the most dangerous number in any appraisal because it is the most flattering. You will build the full cost stack beyond land and build cost, including developer profit, then stress-test the appraisal against a cost overrun, a delay and a rate rise. A complete worked example follows one deliberately modest scheme with every number in its place, and the final chapter sets out your residual appraisal and the legal questions, including planning risk, that it cannot answer. Next in this series: “Planning Strategy, S106 and CIL”.

What’s inside

• The only numbers that actually matter
• Where to find reliable local data for free
• Working out true value, not optimistic value
• The full cost stack nobody mentions
• Stress-testing for the cost overrun, the delay and the rate rise
• A complete worked example, start to finish
• Your residual appraisal, and the legal questions it cannot answer

Educational material only, not financial, legal or tax advice. Results are not typical and are not a guarantee of income. Freedom Property Academy LTD, registered in England and Wales.