Lots are inventory, infrastructure is the factory, and the builder market is the customer. Land development credits are absorption math with dirt risk.
Subdivision underwriting is sequential risk: entitle, improve, absorb. The entitlement layer is binary and belongs in the conditions; the improvement layer is the technical dimension’s home turf — sitework budgets validated against the site’s actual soils, utilities, and offsite obligations, where the expensive surprises live; and the absorption layer is the market study, evidenced by builder demand: who buys finished lots in this submarket, at what pace, under what takedown structures.
Household-formation and migration data from the Census Bureau frame the demand, but the operative customer is the builder, and the operative evidence is takedown agreements, option contracts, or the submarket’s observed lot-absorption velocity. Phasing discipline is the structural mitigant the study should test: does each phase’s revenue retire its own improvement cost, or does the structure bet the early phases’ proceeds on the late phases’ demand?
Wert-Berater’s land practice spans subdivision programs, build-to-rent communities — where the exit is a stabilized rental portfolio rather than retail lot sales, changing the analysis to an operating pro forma at the back end — and highest-and-best-use work that decides what the land should become before anyone asks whether the becoming is feasible.
Engagements are typically initiated by the borrower, with lender or CDC confirmation obtained before work begins — institutions apply differing rules, so sponsors should confirm the required path with their lending contact — and are delivered in 10 to 15 business days from complete project data, and built to the program framework that governs the credit — SBA SOP 50 10 8 coverage minimums of 1.15x operating and 1.00x global, the 37-factor structure of USDA RD Instruction 5001, or the 1.20x convention of conventional credit policy — with a ten-year pro forma, sensitivity at ±5/10/15 percent, rate stress to +3.0 percent, and Monte Carlo analysis as standard equipment.
President, Wert-Berater, Inc. — independent feasibility study consultants since 1998. More than 4,000 feasibility studies completed across all 50 states and internationally, evaluating $40.2 billion in project value for SBA, USDA, EB-5, conventional, and institutional financing decisions. Fiduciary duty runs to the lender and agency in every engagement.
+1 310-857-2443 ext. 800 · email · 1968 South Coast Hwy, Ste 2382, Laguna Beach, CA 92651 · 111 Town Square Pl Ste 1238 PMB 657834, Jersey City, NJ 07310 · 539 W. Commerce St #8486, Dallas, TX 75208
Schedule a ConversationIndependent feasibility studies since 1998 — 4,000+ engagements, $40.2 billion in evaluated project value. Standard delivery in 10 to 15 business days. Fiduciary duty to the lender and agency.