A Raleigh residential developer needed a development pro forma for his largest project, a 42-unit townhome development. We built it. The $8.4M construction loan was approved in 28 days.
01The Situation
The developer had completed 12 smaller townhome projects, typically 8-12 units. The 42-unit development was a different scale with different financing requirements. The bank required a full development pro forma before approving the $8.4M construction loan.
He had good instincts about costs and pricing. What he had never built was a document that presented those instincts in a format a commercial lender would accept.
02What We Did
We built the pro forma from the ground up using the fixed-price GC contract for hard costs, soft costs by category, construction financing costs including interest carry and lender reserve, and sales costs at 2% commission.
The revenue side was built from three comparable sales within two miles: 38 sales in the last 18 months averaging $438K, with newest comps at $456K. We used a conservative $442,857 average and modeled a 14-month absorption period. Development margin at completion: 22.4%. The construction loan was approved within 28 days of submission.
03Client Impact
The pro forma was the first time the developer had laid out every cost and every assumption for a project of this size. The discipline of building it properly gave him more confidence in the project than he had going in. The bank approved it in 28 days.
Breakdown
| Cost Category | Budget | % of Total | Per Unit | Notes |
|---|---|---|---|---|
| Land Acquisition | $2,400,000 | 25.8% | $57,143 | All in |
| Hard Construction | $5,040,000 | 54.2% | $120,000 | Fixed-price GC contract |
| Soft Costs | $840,000 | 9.0% | $20,000 | Architecture, permits, fees |
| Financing Costs | $504,000 | 5.4% | $12,000 | Construction loan + fees |
| Sales & Marketing | $336,000 | 3.6% | $8,000 | 2% commission + marketing |
| Contingency | $180,000 | 1.9% | $4,286 | 5% of hard costs |
| TOTAL COSTS | $9,300,000 | 100% | $221,429 | All-in cost |
| Total Revenue | $18,600,000 | — | $442,857 avg | 42 units |
| Development Margin | $4,164,000 | 22.4% | $99,143 | After all costs |
What changed
Full Development Pro Forma Built
Land, hard costs, soft costs, financing, sales, and margin. All assumptions documented with comparable support.
$8.4M Construction Loan Approved in 28 Days
Lender cited pro forma clarity and comparable support as key factors.
22.4% Development Margin Projected
Conservative comps used. Market appreciation since groundbreaking suggests margin may exceed projection.
Project on Schedule, 8 Units Pre-Sold
Currently month 11 of 18. Closings on track for Q4 2026.
The pro forma was the first time the developer had laid out every cost and every assumption for a project of this size. The discipline of building it properly gave him more confidence in the project than he had going in. The bank approved it in 28 days.
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