How Much Active Adult Community Developers Make: $40M Peak EBITDA
You’re not buying a fixed salary here you’re underwriting a phased real estate project In the researched 60-month case, owner take-home depends on site economics, sales pace, financing, reserves, and equity share, with $4030M Year 3 EBITDA, Month 17 breakeven, and 42 months to payback
Owner income$603k-$4.03MNet marginN/ARevenue for target payN/ABusiness difficultyHard
Want to test your take-home?
Owner income calculator
Estimate owner take-home and the target-pay gap from revenue, margin, costs, reserves, and target pay.
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Planning note: This is a researched planning estimate, not guaranteed salary, tax advice, or owner distribution advice. The output converts project profit to a reserve-adjusted owner distribution, and timing pressure rises if sales slip past planned sale months or minimum cash needs stay above $10.071M.
Want the six biggest income drivers?
1
Sale Price
High
Pricing and unit mix drive gross profit on every closing, so this is the biggest swing in owner take-home.
2
Land Basis
$2.9M
The $2.89M purchase base sets the floor under returns, so a higher land basis cuts every future margin dollar.
3
Absorption Pace
Month 17
Faster sales pull cash forward, while slow closings push breakeven past Month 17.
4
Build Cost
$3.9M
The $3.9M construction budget has to stay tight, because overruns hit margin before the first payout.
5
Financing Split
-10%
Debt terms and the profit split decide how much upside reaches equity, and ROE lands at -10%.
6
Cash Reserve
$10.1M
The model bottoms at $10.071M minimum cash, so fixed overhead and rising payroll can block distributions before payback.
Want the full pro forma for Active Adult Community Development?
The Active Adult Community Development Financial Model Template shows the dashboard, assumptions, development and sales schedules, payroll, opex, capex, cash flow, EBITDA, breakeven, payback, and owner distributions. It also charts Year 1 EBITDA of -$2.909M, Year 3 EBITDA of $4.030M, month 17 breakeven, month 16 minimum cash of $10.071M, and a 42-month payback; use it for planning, not just the headline.
Owner-income model highlights
Owner distributions included
Sales pace can flex
Margin and financing tested
Reserves and equity share
How much profit can an active adult community developer make?
An Active Adult Community Development project can make about $1.629M in five-year EBITDA (earnings before interest, taxes, depreciation, and amortization) before debt service, taxes, reserves, and partner splits; for startup cash context, see How Much To Start Active Adult Community Development Business?. Owner take-home can be much lower because Year 1 and Year 5 are negative, so cash may stay in the project.
How many active adult homes must sell to pay the owner?
If you’re asking how many homes the Active Adult Community Development business must sell to pay the owner, the answer is: base it on closings, not signed interest forms. Here’s the quick math: owner pay = target owner pay ÷ distributable profit per closing; with $680k direct cost per unit before sales and overhead, the model has 0 sales in Year 1, 4 in Year 2, 4 in Year 3, 2 in Year 4, and 0 in Year 5, with the first modeled sale in Month 17 and payback in Month 42.
Owner pay math
Use closings, not forms
Divide pay by profit/closing
Direct cost averages $680k
Add sales, overhead, reserves
Timing and risk
0 sales in Year 1
4 closings in Year 2
4 in Year 3, 2 in Year 4
Pay may wait on lender approvals
Why does active adult community developer income vary so much?
Two Active Adult Community Development deals can show the same profit and still pay owners very differently, because cash timing drives the take-home. In this case, acquisitions run from Month 2 to Month 24, construction starts from Month 4 to Month 27, and sales do not start until Month 17, so the cash hole hits before most revenue arrives. The minimum cash need peaks at $10071M in Month 16, breakeven lands in Month 17, but payback waits until Month 42; IRR is 0% and ROE is -01 in the provided metrics.
Cash timing
Acquisitions run Month 2-24.
Construction starts Month 4-27.
Sales start only at Month 17.
Cash peaks before sales arrive.
Owner return
Breakeven hits in Month 17.
Payback waits until Month 42.
IRR stays at 0%.
Leverage and delays can wipe distributions.
Key Takeaways
Pricing and mix lift margin only when premiums exceed costs.
Land basis and density set profit before construction starts.
Overhead, financing, and reserves can delay owner cash.
Compare low, base, and high owner-income cases
Owner income scenarios
Owner income moves with sale timing, cost control, and reserve needs. This model starts cash-heavy, so the path from Month 17 breakeven to Month 42 payback matters most.
Low, base, and high owner income cases for the project.
Scenario
Low CaseLow Case
Base CaseBase Case
High CaseHigh Case
Launch model
Slower sales, higher build cost, and heavier marketing keep owner income under pressure for longer.
The model hits Month 17 breakeven and Month 42 payback, with five-year EBITDA totaling $1.629M.
Stronger pricing and faster absorption lift owner income and improve the reserve-adjusted distribution.
Typical setup
Sales slip, construction runs hotter, reserves stay larger, and the owner share stays lower while cash is still tied up.
Ten owned units, $29M acquisition cost, $39M construction budget, and $435k capex support the core case.
Controlled construction, lower selling cost, and cleaner waterfall terms free up more cash for the owner.
Cost drivers
Slower sale timing
higher construction cost
heavier marketing load
larger reserves
lower owner share
Month 17 breakeven
Month 42 payback
10 owned units
$29M acquisition cost
$39M construction budget
Stronger pricing
faster absorption
controlled construction
lower selling cost
cleaner waterfall
Owner income rangeBefore owner reserves
Low owner incomeLow Case
Modeled owner incomeBase Case
Higher owner incomeHigh Case
Best fit
Use this to stress-test delayed absorption and tighter cash discipline.
Use this as the planning case for budgets, lender talks, and owner draw timing.
Use this to test upside if sales pace and cost control both land well.
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Planning note: These scenario ranges are researched planning assumptions, not guaranteed earnings, salary promises, tax advice, or distribution commitments.
Active Adult Community Development Core Six Income Drivers
Sales Price and Product Mix
Sales Price and Product Mix
Sales price and mix drive owner income only when the extra price beats the extra cost. In this model, editable average sales price by product can run from $460k to $10M before selling costs and overhead, so the key is gross margin, not top-line bragging rights. One premium unit that sells slowly can also delay cash and push payback past Month 42.
For a 55+ buyer, the mix should lean to single-level layouts, low-maintenance homes, and amenity access. Lot premiums and upgrades can raise gross profit, but only if demand is qualified and the premium homes keep moving. If they don’t, the owner gets more inventory, more carry, and later distributions.
Track mix, not just price
Measure average sales price by product, premium upgrade dollars, and gross margin per unit. Here’s the quick math: if a higher price does not cover the added build and sales cost, owner income drops even when revenue rises. Forecast premium-unit absorption separately, because slow closings can strain cash and delay owner draws.
Track margin by floor plan.
Test premium pricing by buyer segment.
Watch cash through Month 42.
Financing and Investor Waterfall
Financing Waterfall
Project profit is not owner pay. In this model, debt service, lender reserves, investor equity, preferred return, and promote split decide what the owner actually keeps. With Month 17 breakeven and a 42-month payback, cash can stay tied up long after the project looks profitable on paper.
Month 16 is the cash pinch point, so the structure matters. No debt terms are supplied, so the model needs loan-to-cost (debt as a share of project cost), rate, draw timing, fees, required reserves, and owner equity share. If investor capital takes the first distributions, owner income gets delayed and diluted.
Track the cash stack, not just the margin
Model the waterfall in order: lender payback, reserves, investor pref, then owner split. Preferred return means investors get paid first up to a set return; the promote is the upside share after that hurdle. Here’s the quick test: if closings slip, the owner still funds carry costs while distributions move later.
Track LTC, draw schedule, and reserve balance each month. Test how much equity is needed if debt is tighter or draws lag construction. One clean rule: if the project needs outside cash before sales ramp, protect the owner by documenting who gets paid first, when reserves release, and when owner draws can start.
Absorption Pace and Sale Timing
Absorption Pace and Sale Timing
Absorption pace is how fast qualified buyers close homes or lots. Here, the base plan sells 10 units from Month 17 through Month 42, or about 0.38 closings per month. Sales are concentrated in Year 2 and Year 3, with 4 closings each year, so timing drives when project cash turns into owner income.
Faster closings convert inventory to cash, cut carry risk, and can pull distributions forward. Slower sales keep payroll, marketing, insurance, and office costs running longer. That matters here because payback is already 42 months, and minimum cash peaks before sales ramp. Speed turns paper profit into cash.
Track Closings, Not Just Leads
Measure monthly closings against the 10-unit plan, then compare that to qualified buyers and signed contracts. Use the same cash forecast from Month 17 to Month 42 so you can see when overhead outruns sales. The key inputs are unit count, closing cadence, fixed overhead, and payback timing.
Track closings by month.
Watch qualified buyers.
Monitor cash before Month 42.
Flag any missed closing date.
To improve owner income, pull demand forward with tighter follow-up and a closing calendar built around the 4-closings-a-year rhythm in the model. If closings slip, cash stays trapped in unsold units and owner pay moves later. This estimate also hides cancellation risk and any delay in approvals or construction.
Overhead, Reserves, and Launch Costs
Overhead and Reserve Drag
Fixed expenses of $272k per month plus payroll that grows from $425k in Year 1 to $1.055M in Year 5 can turn closed homes into delayed owner pay. Add commissions and marketing that run from 13% of sales to 65% of sales, and the cash left for draws gets thin fast. Here’s the quick math: overhead and launch spending hit before the full sales ramp, so distributable cash is what’s left after those costs and reserves.
Reserves matter here. Warranty, working capital, and community launch support should be held back before any owner distribution, and the $435k capex for the sales center, office furniture, software, visual identity, IT, and vehicles also ties up cash early. What this estimate hides is timing: if sales close slowly, these costs keep running while cash stays trapped in the project.
Track Cash Burn Before Draws
Build a monthly cash forecast that separates fixed overhead, payroll, variable commissions, and reserve holdbacks. That tells you when the project can actually pay the owner, not just when homes close. One clean rule: no draw until reserves are funded and launch capex is covered.
Watch sales pace against overhead every month. If closing volume slips, the same $272k monthly fixed base and rising payroll will eat distributions faster than expected. Keep commissions tied to closed revenue, and test staffing so the Year 5 cost run-up does not outrun absorption.
Construction, Site Work, and Amenities
Construction Cost Control
When construction and amenities are part of the product, every extra dollar has to earn its keep. The base construction budget is $39M across 10 owned units, with unit budgets from $280k to $550k and build times of 10 to 16 months; if costs slip, gross margin falls dollar for dollar unless pricing rises.
The sales center adds $150k of the $435k total capex, so spend hits cash before closings. Roads, utilities, landscaping, trails, pools, fitness space, and community buildings should each sit on their own cost line, because overruns delay breakeven and lower owner take-home.
Track Scope by Cost Line
Measure budget, draw timing, and finish dates by line item, not just project total. Here’s the quick math: if a scope item runs over, that extra cost cuts project profit unless home pricing moves up enough to cover it.
Track each amenity separately
Match draws to closing timing
Set contingency for scope creep
Test pricing against added cost
If costs land before closings, cash gets tight faster and owner distributions move out. Build a monthly forecast that shows which trades, site work items, and amenity packages are driving the burn.
Land Basis and Entitlements
Land Basis and Entitlements
Land basis sets profit before construction starts. Here, owned acquisition cost totals $29M, averaging $290k per unit, with a range from $180k to $450k. The key test is land cost per saleable lot = total land basis ÷ buildable-lot yield, because better density spreads the same land dollar across more homes and lifts owner profit per closing.
Entitlements are the approvals, zoning, utilities, and site work that make the land buildable. If that process slows, interest carry and overhead keep running, so cash to the owner comes later. A low purchase price can still produce weak take-home income if approvals or infrastructure eat the savings. One cheap parcel can still be a bad deal.
Measure land on a per-lot basis
Track purchase price, entitlement timing, zoning, infrastructure needs, and buildable-lot yield before you model profit per home. Use land basis per saleable unit as the main input, not just acreage or headline price. That is what drives gross margin, cash need, and how much the owner can actually draw.
Stress-test yield before closing.
Price approval delays into carry.
Separate utilities from land price.
Reforecast profit per home fast.
If density rises and approvals stay on schedule, the same $29M supports more homes and lowers minimum cash needs. If entitlements slip, carry grows, distributions move out, and owner income falls even when the land deal looked strong on paper.
