Most land pro formas treat entitlement as a date, not a cost. The model shows a closing, a start of construction and a first lot sale, and the months in between quietly cost nothing. In the real world they cost plenty — and they are the part of the deal you control least.
What runs while you wait
From the day you sign, a meter starts. Depending on how the contract is structured, some or all of these are running:
- Earnest money at risk once the feasibility period ends, whether or not the approvals come through.
- Land carry — interest on the purchase price if you close before entitlement, or extension fees if you don’t.
- Property taxes and insurance on a site that produces no income.
- Consultants: civil engineering, surveys, traffic and environmental studies, land-use counsel.
- Cost drift — the hard-cost estimate you priced today will not be the one you build with in eighteen months.
Build the schedule before the spreadsheet
Before you open the pro forma, write the approval path down step by step and put a realistic duration next to each step. The planning department, the engineer who works that jurisdiction every week and the last three projects approved nearby are better sources than the code itself.
| Stage | Your estimate | What usually drives it |
|---|---|---|
| Rezoning or variance | 4–9 months | Hearing calendars, neighbour opposition |
| Preliminary plat | 3–6 months | Review cycles, utility capacity letters |
| Construction drawings | 4–8 months | Drainage design, agency comments |
| Permits and bonding | 1–3 months | Fee schedules, surety |
The ranges above are illustrations, not benchmarks. Use your own — and when you are unsure, use the longer number.
Turn months into dollars
Take a $3.2 million site closed up front at 8% interest. Carry alone is about $21,300 a month. Add $2,500 a month in taxes and insurance and $180,000 of consultants spread across the approval period, and an 18-month entitlement costs roughly $609,000 before a single road is graded. Stretch it to 24 months and the figure passes $750,000.
A deal that pencils at month twelve can be dead at month twenty-four — and nothing about the land changed.
Negotiate the clock, not just the price
Once delay has a price, it becomes something you can trade. Sellers often care more about certainty and headline price than about timing, which gives you room to ask for:
- A feasibility or entitlement period long enough for the path you mapped, not the one you hope for.
- Extension options priced in the contract today, rather than negotiated under pressure later.
- Closing at approval, so the seller carries the land while the risk is highest.
- Releases of earnest money tied to approval milestones rather than to the calendar.
Make delay a variable
Whatever tool you use, give entitlement duration its own input and stress it: what happens to the return at six extra months, and at twelve? If the answer is that the deal no longer works, you have found your walk-away point — and you found it before you spent the money.
