Residential Development Break-Even Point: Month 22 Revenue Plan

Fixed costs $76.6K/mo Year 1 base

Contribution margin 94.5% After variable fees

Break-even revenue $81.0K/mo Monthly target

Break-even timing Month 22 First break-even

Break-even calculator

Use this to test whether monthly home sales cover commissions, brokerage fees, and fixed payroll and overhead.

Lean Base Full

Monthly revenue Revenue sets the pool that covers direct costs and overhead. $ Lower sales Higher sales Variable expenses Commissions and brokerage fees rise as sales increase. $ Lower fees Higher fees

Money available to cover fixed costs $95,100 $100,000 revenue - $4,900 variable expenses

Margin ratio

95%

Covers fixed costs

Yes

Fixed monthly costs This is the monthly cost base the project has to absorb. $ Lower overhead Higher overhead

Break-even chart Revenue Total costs

Which expenses are fixed and which move with sales in a new-home development business?

Cost classification

Classification keeps break-even honest: fixed overhead sets the monthly hurdle, while sales-linked fees reduce contribution margin. Keep land purchases and construction budgets in project economics, not simple monthly overhead break-even.

Expense	Cost	Break-Even Treatment	Common Mistake
Office Rent	Fixed	Include $12,000 per month in overhead for each active model month.	Allocating rent to individual homes and hiding the monthly cash hurdle.
Utilities & Internet	Fixed	Include $1,500 per month unless site activity creates a separate usage charge.	Treating normal office service as variable with each sale.
Corporate Insurance	Fixed	Include $2,500 per month as recurring overhead across the planning range.	Leaving insurance out because it does not attach to one project closing.
Professional Services (Legal/Accounting)	Semi-fixed	Start with $7,000 per month, then step it up when deal volume drives added work.	Keeping it flat even as acquisitions, closings, and reporting needs rise.
Sales Commissions	Variable	Deduct 3.0% of first-year sales from revenue before calculating contribution margin.	Putting commissions in fixed overhead instead of tying them to sales.
Project Marketing & Brokerage Fees	Variable	Deduct 2.5% of first-year sales as a direct selling expense.	Spreading brokerage fees evenly across months with no sales activity.
Project Manager Payroll	Semi-variable	Model payroll from 0.5 FTE to 2.0 FTE as project load grows.	Assuming the full $120,000 annual role is fixed from Month 1.

How does break-even shift from a lean community launch to a full-scale build-out?

Scenario table

Break-even rises as fixed overhead steps up from the lean launch to the full build-out, even though the margin stays very high. The small-community case needs the least monthly revenue, while the full-scale case needs the most cushion.

Planning assumptions only; sale price, rent roll, and unit absorption are inputs, not source figures.

Scenario	Monthly Revenue	Variable Costs	Fixed Costs	CM Ratio	Operating Profit	Break-Even Signal
Lean: small community launch	$810k	$44k	$766k	94.6%	$0	Needs tight absorption; cushion is thin.
Base: normal build pace	$989k	$48k	$941k	95.2%	$0	Supports break-even at the stated run rate.
Full: faster scale case	$1.13m	$44k	$1.09m	96.1%	$0	Higher overhead, so scale must stay strong.

What breaks the break-even plan if closings slip or costs keep rising?

Stress test

Year 2 is tight: fixed costs are about $941k a month and break-even is roughly $989k. Permit delays, slower closings, a 10% overhead bump, or a 2-point margin squeeze can push cash toward the $29.4M low point by Month 35.

Stress Case	Changed Assumption	Break-Even Revenue	Revenue Gap	Risk Signal
Current plan	No change to Year 2 costs or margin.	$989k/mo	$0 gap	Only a thin cushion before delays bite.
Revenue shortfall	Revenue lands 20% below the break-even run rate.	$1.24M/mo	$189k gap	Slower closings can turn into monthly cash burn.
Fixed-cost pressure	Fixed costs rise 10% above the Year 2 base.	$1.088M/mo	$99k gap	Overhead growth eats the cushion fast.
Margin pressure	Variable expenses widen by 2 percentage points.	$1.010M/mo	$21k gap	Small subcontractor cost creep moves breakeven up.
Combined pressure	Revenue is down 20%, fixed costs rise 10%, and margin compresses 2 points.	$1.088M/mo	$299k gap	One delay plus cost inflation can break the plan.

Can this residential development still hit break-even if closings slow and construction runs long?

Founder checklist

Before you buy land or lock in hiring, confirm the project still clears Month 22 break-even with the modeled build pace and fee load. If closings slip or construction runs long, the $29.391M cash trough at Month 35 gets harder to fund.

1ClosingsMonth 22

Verify the first sales and closings can still land by Month 22, because that is the break-even point and delays push payback out.

2Cash trough-$29.4M

Verify reserve funding can cover the modeled Month 35 low point, since that is the deepest cash hole before the project turns.

3Monthly burn$76.6K/mo

Verify payroll and fixed overhead fit this year-one burn before ordering materials, because fixed costs drive how fast cash leaves the business.

4Fee load5.5%

Verify sales commissions plus project marketing and brokerage fees stay near 5.5% of revenue in year one, since that cuts straight into contribution margin.

5Build span10-18 mo

Verify contractor schedules can hold the 10 to 18 month construction window, because slips delay revenue and extend carrying costs.

6Staff ramp0.5-2.0 FTE

Verify the team can ramp project management and support staff from half-time to full-time levels without lifting fixed cost too soon.