Developer's Fee

Information by State  Print version   In This Section Development Costs   Development Costs and the HOME Multifamily Underwriting Template   Acquisition Costs   Site Work Costs   Construction / Rehabilitation Costs   Architectural and Engineering Fees   Other Owner Costs   Interim Financing Costs   Permanent Financing Fees and Expenses   Developer's Fee   Initial Project Reserves   Tenant Relocation Costs   Project Administration and Management Costs   Other Development Costs

Developer's Fee is compensation to the developer for the time and risk involved to develop the project. It is typically based on the size of the project, the total development cost and the risk associated with the project.

The developer's fee is just one way that a developer can make money from a project. Others include:

• Construction profit (if a general contractor owned by the developer is used for the project),
  
  
• Property management fees (if a property management company owned by the developer is used for the project),
  
  
• Project ownership (if the developer will receive a return on equity invested in the project), and
  
  
• Sale of tax credits to investors (for projects receiving Low-Income Housing Tax Credits.)

Estimate the developer's fee, considering the size, risk, and cost of the development project, as well as the developer's interest in the project. For example, their developer's fee may be lower if they also hold an ownership stake in the project or stand to profit from managing the property.

The developer's fee is expressed as a percentage of the total development cost under the Other Information column. Note that this percentage will change as you continue to input data on other costs.