Most people overthink feasibility. They find a site that looks promising and then spend days building elaborate spreadsheets, calling consultants for quotes, and agonising over numbers before they know whether the deal is even in the right ballpark.
That's backwards. The first feasibility you run on any site should take 20 minutes or less. It should use rough numbers. And its only purpose is to answer one question: is this site worth investigating further, or should I move on?
If the back-of-envelope numbers show 30%+ margin, you invest time in detailed due diligence. If they don't, you walk away immediately. No further research. No "maybe if I tweak the numbers." Move on to the next site.
"I've screened thousands of sites over 30+ projects. The back-of-envelope calculation is the single most valuable skill I use. It lets me say no to 90% of sites in minutes, so I can focus my energy on the 10% that actually have potential."
Why a quick calculation matters
Speed is a competitive advantage in property development. The faster you can evaluate a site, the more sites you can assess, and the better your chances of finding the ones that genuinely stack up.
Detailed feasibility studies have their place. But they come later, after the back-of-envelope calculation has confirmed the deal is worth the effort. Spending $500 on a town planner's preliminary advice makes sense when you've already confirmed the numbers are in the right zone. Spending $500 before you've run a 20-minute calculation is a waste.
Think of the back-of-envelope as a coarse filter. It doesn't tell you exactly what a project will deliver. It tells you whether a project is worth the detailed analysis that will tell you exactly what it will deliver.
The 4 numbers you need
The entire calculation runs on four inputs. You can find all of them using free online tools in under 20 minutes.
1. Gross Realisation Value (GRV)
What will the finished lots sell for, combined? Check recent comparable sales of similar-sized lots in the same suburb using realestate.com.au's "sold" filter. Be conservative. Use the lower end of the range.
2. Purchase price
What will you pay for the site? If it's listed, use the asking price (or slightly below). If it's off-market, use comparable site sales to estimate a realistic purchase price.
3. Stamp duty and buying costs
Use a rough estimate of 4% of the purchase price. This covers stamp duty, legal fees, and building inspections. It's not exact, but it's close enough for a back-of-envelope.
4. Subdivision cost estimate
For a standard 1-into-2 subdivision on a flat site with services in the street, use a rough total of $120,000 to $180,000 for everything: council fees, infrastructure charges, civil works, surveyor, planner, service connections, holding costs, and contingency. Adjust upward for sloping sites, larger projects, or councils known for high infrastructure charges.
These ranges are based on typical costs across projects I've completed and projects my students have completed in QLD, NSW, VIC, WA, and SA. They're deliberately broad because at the back-of-envelope stage, precision isn't the goal. Getting into the right ballpark is the goal. You'll refine these numbers during detailed due diligence.
The 5-step process
Estimate your GRV
Find 3 or more recent sales of comparable lots in the suburb. Average them. Use the conservative end. If similar 450 sqm lots are selling for $480,000 to $530,000, use $490,000 per lot. For a 1-into-2, your GRV is $490,000 x 2 = $980,000.
Estimate your total costs
Add up: purchase price + stamp duty/buying costs (4% of purchase price) + subdivision cost estimate ($120K to $180K for a standard 1-into-2) + selling costs (2.5% of GRV for agent commissions). That's your total cost base.
Calculate gross profit
GRV minus total costs. Simple subtraction.
Calculate margin on costs
Gross profit divided by total costs, multiplied by 100. This gives you your margin as a percentage.
Apply the 30% rule
If the margin is 30% or above, this site is worth detailed investigation. If it's below 30%, move on. Don't try to "make the numbers work" by using optimistic assumptions. The numbers either work or they don't.
Worked example
Here's a quick example for a 1-into-2 subdivision in a suburban Queensland location.
This deal passes the 30% rule at the back-of-envelope stage. It's worth investing time in detailed due diligence: getting a planner's preliminary advice, confirming infrastructure charges with council, and refining the cost estimates.
If the margin had come back at 22%, you'd walk away and screen the next site. No planner calls. No surveyor quotes. No wasted time.
Quick rules of thumb
After running hundreds of these calculations, here are some shortcuts that speed up the process even further.
- The purchase price ceiling: For a 1-into-2 subdivision, the purchase price generally shouldn't exceed 55% to 60% of the total GRV. If the site costs more than that, the margin will almost always fall below 30%.
- The $150K test: For a standard 1-into-2 on a flat site with services, total subdivision costs (excluding the land purchase) will typically land around $120,000 to $180,000. If your deal doesn't work with $150,000 in the middle of that range, it probably won't work at all.
- The 10-second reject: If the asking price for the site is more than the value of one of the finished lots, the deal almost certainly doesn't stack up. This one filter alone eliminates most listed sites instantly.
"If you can't get the numbers to work on the back of an envelope, they're not going to magically improve when you build a detailed spreadsheet. The back-of-envelope is your permission to stop or keep going."
Want the detailed feasibility framework?
Our cornerstone guide on the 30% Margin Rule covers the full calculation with state-specific cost assumptions, a complete worked example, and the five things that kill margin.
Read: The 30% Margin Rule →What comes next
The back-of-envelope feasibility is step one. If a site passes, you move into detailed due diligence: engaging a town planner for preliminary advice, confirming council infrastructure charges, getting accurate comparable sales data, and refining your cost estimates with actual consultant quotes.
If you want the full feasibility calculation with detailed cost inputs and a complete worked example, read The 30% Margin Rule.
If you need to find sites to run this calculation on, read How to Find Subdivision Sites Using Free Online Tools.
And if you want a structured framework for the entire process from site search to settlement, the Master Land Subdivision online course walks you through everything step by step.
