Real Estate Development Break-Even Analysis: Month 30 Threshold

Fixed costs $88.2K-$100.2K/mo Base monthly burn

Contribution margin 89%-93% After sales costs

Break-even revenue $95K-$113K/mo Needed to cover burn

Break-even timing Month 30 Model breakeven point

Break-even calculator

Test monthly development revenue against direct project costs and the fixed overhead it has to cover.

Lean Base Full

Monthly revenue Revenue sets how much margin is left for fixed costs. $ Low sales High sales Variable expenses Use direct project costs like marketing and brokerage that rise with revenue. $ Low direct High direct

Money available to cover fixed costs $4,525,000 $5,000,000 revenue - $475,000 variable expenses

Margin ratio

90%

Covers fixed costs

Yes

Fixed monthly costs This is the monthly overhead and payroll the margin has to cover. $ Low overhead High overhead

Break-even chart Revenue Total costs

Which expenses are fixed and which move with sales in a real estate development break-even model?

Cost classification

Break-even only works if time carry, land basis, and sales-linked fees sit in the right buckets. Fixed office and land costs burn cash before sales, while brokerage and marketing move with project sales.

Expense	Cost	Break-Even Treatment	Common Mistake
Land acquisition for owned sites	Fixed	Set land basis when owned sites are acquired; do not flex it with sales pace.	Treating owned land purchases as a variable sales expense.
Rented site control	Semi-fixed	Carry $15,000, $12,000, or $18,000 per month once each rented site starts.	Treating time-based site carry like a one-time closing item.
Construction labor and materials	Variable	Tie to the $114.0 million total construction budget and project scope.	Dividing the full budget evenly across all months.
Site work	Semi-variable	Model a base site setup plus scope-driven work as each project moves into construction.	Forcing all site work into a fixed monthly overhead line.
Permitting and design fees	Semi-fixed	Step up by project phase rather than by monthly sales volume.	Linking approvals and design spend directly to closing volume.
Third-party management and brokerage fees	Variable	Apply to sales at 6.0% in the first year, falling to 4.0% by the fifth year.	Leaving brokerage fees out of contribution margin.
Project-specific marketing and sales	Variable	Apply to project sales at 5.0% in the first year, falling to 3.0% by the fifth year.	Budgeting marketing as flat overhead despite sales-linked spend.
Office rent	Fixed	Include $12,000 per month from Month 1 through Month 60.	Ignoring office burn during pre-sale development months.

How does break-even shift from the lean phase to the full seven-project buildout?

Scenario table

Break-even gets easier as the variable load falls from 11% to 7%, but fixed burn stays high. The base case sits closest to the Month 30 signal, and the full build only holds if sales and lease-up stay on schedule.

Planning assumptions only; no sale price assumptions were provided, so revenue is the break-even threshold, not a guaranteed forecast.

Scenario	Monthly Revenue	Variable Costs	Fixed Costs	CM Ratio	Operating Profit	Break-Even Signal
Lean owned phase	$991,000	$109,000	$882,000	89%	$0	Thin cushion; sales slippage pushes break-even past Month 30.
Base seven-project case	$1,162,000	$105,000	$1,057,000	91%	$0	Closest fit to the Month 30 break-even signal.
Full peak pipeline case	$1,185,000	$83,000	$1,102,000	93%	$0	Highest cushion, but the $45,000 rental carry still needs on-time sales.

What breaks the Month 30 break-even plan for this development model?

Stress test

The base case only works if sales land on time and margin stays near 91%. A 10% sales miss or a 2-point margin drop lifts break-even fast, and the Month 29 cash trough gets worse.

Stress Case	Changed Assumption	Break-Even Revenue	Revenue Gap	Risk Signal
Current plan	No change.	$147.3M	$0 gap	Month 30 is the base case, but cash bottoms in Month 29.
Revenue shortfall	Gross sales come in 10% below plan.	$163.7M	$16.4M gap	Slower absorption pushes breakeven past Month 30.
Fixed-cost increase	Monthly fixed overhead runs 10% higher.	$148.0M	$0.7M gap	Even a small overhead bump narrows the cushion.
Margin pressure	Contribution margin drops from 91% to 89%.	$150.6M	$3.3M gap	Lower margin means each sale covers less of the build.
Combined pressure	Sales come in 10% low, fixed overhead runs 10% high, and margin drops to 89%.	$168.1M	$20.8M gap	Late sales, higher carry, and lower margin create the tightest cash window.

What should a founder verify before closing land and breaking ground?

Founder checklist

Do not close land or start site work until zoning, utility access, and the sales path still fit the model. The deal only works if the $114.0M build plan, $14.0M owned-land exposure, and Month 30 break-even date all survive your reserve check.

1EntitlementsPre-close

Verify zoning, entitlement path, utility access, and site work scope before land purchase so you do not buy a parcel you cannot build on.

2Land Carry$14.0M + $45K/mo

Test the owned land exposure and rented site carry together, because $14.0M of purchases plus $45K a month in rent hits cash before any sale.

3Build Budget$114.0M

Lock the full construction plan against bids and contingencies, because the seven project budgets total $114.0M and one overrun can break the spread.

4Fee Drag7%-11%

Check that project-specific marketing and sales plus brokerage fees, at 11.0% in Year 1 and 7.0% by Year 5, still leave room for profit at exit.

5Payroll Ramp$770K→$980K

Phase hiring so payroll can rise from about $770K a year in Year 1 to $980K by Year 3, or fixed overhead will outrun cash.

6Cash RunwayMonth 29

Set reserves for the -$59.685M minimum cash point in Month 29 and tie the broker plan to sale starts in Month 30, 38, 46, 50, and 60.