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Key Takeaways
- The minimum required monthly operating budget before rental income stabilizes is approximately $66,758, covering essential fixed payroll and general administrative expenses.
- The financial model projects a 26-month runway is required to reach the break-even point, anticipated in February 2028, highlighting the need for a substantial capital buffer.
- Staff payroll, totaling $36,458 monthly for 40 FTEs, is the single largest recurring expense category driving cash burn during the pre-stabilization period.
- The development phase requires significant capital reserves to cover the projected Year 1 EBITDA deficit of -$181 million until revenue streams begin flowing in 2028.
Running Cost 1 : Staff Payroll
Payroll Snapshot
Your 2026 projected staff payroll for 40 full-time employees (FTEs) reaches $36,458 monthly. This figure covers key roles necessary for managing complex mixed-use development pipelines, including directors and analysts.
Cost Inputs
This $36,458 monthly payroll budget is fixed for 2026, covering 40 specified roles. Inputs needed are the headcount (40 FTEs) and the specific roles: Development Director, Asset Manager, Project Coordinator, Financial Analyst, and Administrative Assistant. This cost is a primary fixed overhead before property management fees scale with revenue.
- Headcount: 40 FTEs
- Year: 2026
- Total Monthly Cost: $36,458
Controlling Headcount
Controlling personnel spend means linking compensation structure to project milestones, not just fixed salary. Avoid over-hiring specialized roles early; Project Coordinators can often absorb Analyst tasks initially. If you scale too fast, you defintely blow the G&A budget. Savings benchmarks suggest keeping total G&A payroll under 15% of projected management fees.
Hidden Payroll Tax
Remember that 40 FTEs implies significant infrastructure beyond salary, like benefits and employer taxes, which aren't explicitly in this $36,458 figure. Always budget an additional 25% to 35% on top of base salaries for fully loaded costs in the US market.
Running Cost 2 : Office G&A Rent
Fixed Overhead Baseline
Your corporate office overhead is a predictable $12,000 monthly expense, locked in from 2026 through 2030. This fixed cost hits your operating budget immediately, separate from project-specific site costs. Understand this baseline defintely before scaling staff payroll.
Office Cost Drivers
This $12,000 covers the general and administrative (G&A) corporate headquarters rent. It is a pure fixed cost, meaning it doesn't change if you manage one project or ten, unlike Property Management Fees scaling with revenue. It sits alongside the $36,458 monthly staff payroll as core overhead.
- Fixed monthly input: $12,000
- Coverage period: 2026–2030
- Impacts break-even point.
Managing Fixed Rent
Since this cost is fixed and locked in, direct monthly savings are impossible unless you break the lease early. The key is ensuring the office size supports your planned 40 FTEs efficiently. Don't sign longer commitments until stabilized revenue targets are hit.
- Lease duration dictates savings potential.
- Avoid excess square footage now.
- Factor into initial capital raise.
Annual Overhead Impact
This fixed rent adds $144,000 annually to your baseline operating expenses ($12,000 x 12 months). Compare this against the $25,000 monthly Retail Promenade lease starting in September 2026; rent costs escalate quickly once property operations begin.
Running Cost 3 : Professional Fees
Mandatory Fee Budget
You must budget $7,500 monthly for the necessary specialized legal and accounting support these complex property deals demand. This covers entity structuring and compliance across development and holding phases. Don't skimp here; compliance errors cost far more than good counsel. That’s the bottom line.
Legal & Accounting Scope
This $7,500 covers ongoing professional fees for specialized needs like entity management—setting up legal structures for each asset—and regulatory compliance for development projects. It’s a fixed operating expense baked into the 2026 overhead. This cost is small compared to the $36,458 monthly payroll requirement.
- Covers entity structuring needs.
- Mandatory for complex deals.
- Fixed monthly overhead.
Managing Legal Spend
You can't cut compliance, but you can manage the burn rate. Use fixed-fee arrangements for routine filings instead of pure hourly billing where possible. A common mistake is using general counsel; specialized real estate lawyers cost more upfront but prevent costly future remediation. We defintely see savings here.
- Seek fixed retainers early.
- Bundle services for volume.
- Avoid reactive hourly billing.
Budget Reality Check
Honestly, $7,500 monthly is lean for multi-state, mixed-use development involving institutional capital partners. Expect this number to increase significantly once major acquisition or disposition events trigger heavy transactional work outside of routine entity maintenance. This is the baseline, not the ceiling for specialized support.
Running Cost 4 : Acquisition Leases
Lease Cost Cliff
The Retail Promenade lease hits in September 2026 at $25,000 per month, immediately spiking your fixed overhead well ahead of the 2027 Community Center commitment. This timing demands aggressive pre-funding or revenue targets to absorb the cost increase before stabilization.
Retail Lease Inputs
This $25,000 monthly commitment covers the lease for the retail component of an acquired property, starting September 2026. It stacks directly onto existing overhead like the $12,000 office rent and $7,500 in professional fees. You need to confirm the exact lease duration and escalation clauses to model the full impact beyond 2027.
- Lease start date: September 2026
- Monthly fixed cost: $25,000
- Precedes 2027 lease start
Lease Optimization Tactics
Since this is a fixed lease obligation, management centers on timing the asset stabilization. Avoid signing this lease until the underlying retail space has secured anchor tenants ready for immediate occupancy upon closing. Defintely push for a rent abatement period tied to tenant build-out timelines.
- Tie rent commencement to tenant fit-out
- Ensure high occupancy on day one
- Model impact against payroll growth
Cash Flow Warning
Monitor your cash reserves closely between September 2026 and early 2027. That $25,000 fixed expense hits solo for several months, creating a cash burn spike that must be covered by development profits or existing capital before the next major lease obligation begins.
Running Cost 5 : Corporate Insurance
Fixed Insurance Baseline
Your General and Administrative corporate insurance is a predictable fixed cost of $3,000 monthly, remaining level throughout the entire 2026 through 2030 forecast. This predictable expense is crucial for budgeting operational stability before variable property management fees scale up.
Cost Inputs
This $3,000 covers general liability and corporate overhead insurance, not project-specific construction risk. It’s a flat monthly charge independent of revenue or project volume. It sits within the initial fixed operating expenses alongside payroll and rent, before property management fees scale with rental income.
- Fixed cost basis: $3,000/month.
- Covers corporate overhead only.
- Stable 2026 through 2030.
Cost Control
Since this is fixed, optimization centers on policy structure, not volume. Review coverage limits annually against asset value growth to avoid over-insuring assets. A common mistake is bundling unrelated risks, which inflates the premium unnecesserily.
- Benchmark against peer portfolios.
- Bundle renewals strategically.
- Check policy exclusions yearly.
Overhead Impact
Since insurance is $3,000 flat, it adds $36,000 annually to your baseline overhead for five years. This certainty is helpful when modeling against variable costs like the 40% property management fees that start in 2026, giving you a solid floor for break-even analysis.
Running Cost 6 : Tech Subscriptions
Tech Stack Budget
Your essential technology stack requires a fixed allocation of $2,500 monthly. This covers the critical software needed for complex financial modeling, project tracking across developments, and internal team communication for your 40-person operation. This spend is non-negotiable for data integrity.
Software Essentials
This $2,500 covers platforms for project management (tracking construction milestones), advanced financial modeling (calculating Internal Rate of Return, or IRR), and secure communication. Inputs are based on required licenses for 40 staff, plus specialized real estate analysis tools. It’s a fixed operating cost against variable development spend.
- Project management licenses
- Financial analysis software
- Secure data sharing tools
Controlling Tech Spend
Avoid buying enterprise licenses too early; many platforms offer tiered pricing based on active users, not seats. A common mistake is paying for premium features you won't use until you hit $100M AUM (Assets Under Management). Audit usage quarterly to downgrade unused seats defintely.
- Audit licenses every quarter
- Negotiate annual commitments
- Watch out for seat creep
Data Integrity Cost
Since your Unique Value Proposition relies on a data-driven investment model, these subscriptions are direct inputs to your decision-making quality. If the modeling software fails or communication lags, you risk mispricing an acquisition or delaying a merchant build timeline. Pay for reliability here.
Running Cost 7 : Property Management Fees
Fee Glide Path
Property Management Fees are a major variable cost, starting high at 40% of rental revenue in 2026 before dropping to 20% by 2030. This structure means initial margins will be tight until stabilization occurs. You need clear operational milestones to trigger the planned rate reduction. That's a big lever.
Cost Inputs
This cost covers leasing, tenant relations, and maintenance for stabilized assets. Estimate it by taking projected gross rental income and applying the scheduled percentage. For 2026, use 40%; for 2030, use 20%. Don't forget this cost only scales as properties become operational, unlike fixed overheads like the $12,000 rent. Honestly, it scales only when you collect rent.
- Base is gross rental revenue.
- Apply 40% rate in 2026.
- Target 20% rate by 2030.
Managing the Rate
Managing this fee means aggressively hitting milestones that trigger the rate step-down. If you manage in-house later, you capture the savings, but factor in the 40 FTE payroll cost. A common mistake is locking in a flat rate too early. Negotiate the 40% to 20% glide path upfront with your initial management partner, defintely.
- Tie rate reduction to occupancy goals.
- Benchmark third-party rates now.
- Avoid flat fees in early leases.
Margin Impact
Since this cost is tied directly to operational revenue, high initial vacancy or slow lease-up compresses your contribution margin fast. If stabilization takes longer than planned, that 40% fee eats cash flow immediately. This variable cost directly impacts your projected NOI.
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Frequently Asked Questions
Initial fixed running costs are approximately $66,758 per month in 2026, covering payroll and G&A This excludes construction financing and property-specific leases, which add $25,000 monthly starting late 2026;