Internal demo. Indicative only. Not a valuation. Nothing is saved.
HEF Deal Calculator

Sixty seconds. No site address. Start with the income.

What can you afford to pay for this site?

Most people buy a site and hope the numbers work. Start at the other end. Estimate what the finished asset could earn, apply a capitalisation rate, and work backwards to the most you can afford to pay.

1

What will the finished asset earn?

Weekly rent for each dwelling once the project is complete.

Add another income stream
$4,000Combined weekly income
× 52 =
$208,000Annualised income
2

What capitalisation rate applies?

The lower the rate, the higher the capitalised value. This assumption matters more than any other.

What is a cap rate?

A capitalisation rate represents the relationship between an asset's income and its value. The appropriate rate depends on the property, the location, market conditions and the valuation methodology applied. An income capitalisation approach is not automatically the right methodology for every residential asset.

Indicative end value $6.5m $208,000 a year capitalised at 3.20%
3

What will it cost to create?

Everything between the site and the finished asset.

See your maximum site price and full sensitivity analysis

You have your indicative end value. The rest of the feasibility, the maximum you can pay, the equity the project could create and how it all moves when the assumptions change, is one step away.

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The opportunity gap

HEF looks for the gap between what a property costs and what its completed income can support. Two things widen that gap, and they can happen at the same time.

Scenario A

Purchase price
$3,000,000
Combined rent
$3,400 a week
Annual income
$176,800
Cap rate
3.20%
Indicative end value
$5,525,000
Construction and other costs
$2,000,000
Total project cost
$5,000,000
Indicative equity created
$525,000

Scenario B

Purchase price
$2,500,000
Combined rent
$4,000 a week
Annual income
$208,000
Cap rate
3.20%
Indicative end value
$6,500,000
Construction and other costs
$2,000,000
Total project cost
$4,500,000
Indicative equity created
$2,000,000

Same construction cost, same cap rate. A lower acquisition price and a stronger completed income, and the indicative equity moves by nearly $1.5m.

Why multiple income streams matter

An existing dwelling at $2,000 a week and a new dwelling at $2,000 a week is $4,000 a week combined, or $208,000 a year. At a 3.20% cap rate that capitalises to $6.5m. Development creates income, income supports the valuation, and the valuation is where the equity comes from.

Why rent matters so much

Under an income based approach, every extra dollar of sustainable income has an amplified effect. At a 3.20% cap rate an additional $10,000 a year is $312,500 of capitalised value. An extra $20,000 is $625,000. An extra $30,000 is $937,500. That is why design, product, location and achievable rent matter as much as build cost. It is not about building as cheaply as possible.

Why purchase price matters

Every dollar saved on acquisition comes straight off total project cost. If the end value assumptions hold, buying at $2.5m instead of $3m adds $500,000 of project margin. This is why a softer acquisition market is not automatically a worse market for this kind of project.

The HEF paradox

Sometimes a weaker property market creates a stronger development opportunity. We are not relying on an existing property rising in value. We are manufacturing the characteristics that create value: acquire well, build strategically, create multiple income streams, lift sustainable rental income, control construction cost, and finish with an asset worth materially more than it cost to create.

Most property investors ask how much will the market go up?

HEF asks how much value can we manufacture?

The difference is control. What you pay, what you build, what it costs, what income it can sustainably generate, what valuation methodology is appropriate, and the margin between total cost and indicative end value. Those are the inputs worth arguing about.

This calculator provides an indicative feasibility only. It is not a property valuation, a formal feasibility study, financial product advice, credit assistance, tax advice or legal advice, and it does not guarantee any investment outcome. Income capitalisation is not automatically the appropriate valuation methodology for every residential asset. Whether it applies, and what rate is appropriate, depends on the property, the evidence available, the sustainability of the income, market conditions, the valuation methodology adopted and the requirements of the valuer or lender involved. Rental income, construction costs, approval and holding costs, capitalisation rates and end values entered or shown here are assumptions, not forecasts, and are not guaranteed. Figures are rounded. The calculator does not account for GST, stamp duty, land tax, capital gains tax, selling costs, finance costs beyond any amount you enter, planning risk, construction risk, delays or vacancy. The maximum site acquisition price shown is the arithmetic remainder of your own assumptions and is not a recommendation to pay that price. Henderson Advocacy is a property buyers agency and does not hold an Australian Financial Services Licence or an Australian Credit Licence. Confirm any valuation, structure, tax, planning or lending decision with your own valuer, accountant, solicitor and broker before you act.