What is the most you could pay for this site?

Residual land value answers the only question that matters before you make an offer: what can the land be worth to this scheme, at the margin you require. Everything the site sells for, less everything it costs to build and sell, less the profit you will not go below, is what is left for the dirt.

This calculator does not evaluate a formula. It scales the land price and re-runs the entire appraisal at each step until the margin on cost lands on your target — the same solver the product runs on a full scenario.

The shape of it is simple. Gross realisation — what the finished product sells for — less the GST inside that revenue, less construction, professional fees, contingency, marketing and agents, less the profit you require, leaves the residual. Every appraisal textbook prints some version of that line.

The trouble is that the line is circular. Interest depends on how much you borrow, which depends on what you pay for the land. Facility sizing depends on total cost, which includes the land. Solve the line once with funding costs frozen at your guess and you get an answer that is right about arithmetic and wrong about money.

The engine behind this page bisects on a single land factor: it scales every land lot’s purchase price by one common multiplier, recomputes the whole appraisal — cost base, drawdown, interest, margin — and moves the bracket until the margin on cost sits on your target. Because each probe is a full appraisal, funding costs move with the bid instead of being held at the price you started from.

That is also why a solved bid can legitimately differ from the residual land value line in a summary table. Both are worth looking at; only one of them re-derives interest.

The solver states its own limitation, and the calculator prints it rather than hiding it: acquisition costs held at entered values. Transfer duty is the one that bites — duty on a site scales with the price you pay for it, so a bid solved with duty held at its entered figure is slightly optimistic. Price the duty on the development site duty calculator and add it to your other costs to close most of that gap.

Three other simplifications are worth naming. The appraisal runs a 24-month program, because a public screen does not ask for a program. No debt or equity is entered, so funding costs are zero and the answer is an ungeared ceiling. And the whole gross realisation is treated as one settlement at the end, rather than a settlement profile across the last months of the scheme.

Profit is measured on revenue net of GST. If your gross realisation is stated GST inclusive, one eleventh of it is not yours, and the residual falls accordingly. If the sales are input taxed or otherwise GST exempt, the whole figure is revenue. On a $12m scheme the difference between those two readings is over $1m of revenue — and most of that lands on the land price.

If the site qualifies for the margin scheme, the GST wedge is smaller again. The margin scheme calculator shows by how much.

A scheme with a $12,000,000 gross realisation stated GST inclusive, $6,500,000 of construction and $1,800,000 of other development costs, at a 20% target margin on cost.

Change one input and watch which way the bid moves. Add $500,000 of construction and the land bid falls by more than $500,000, because the required profit is a percentage of a cost base that just grew. That asymmetry is the whole reason a residual is solved rather than subtracted.