rule of 5

rule of 5

A rule of thumb used by subdividers to estimate development costs. Generally,one-fifth goes to land acquisition;one-fifth to site improvement,engineering,and legal; one-fifth to miscellaneous charges such as loan interest; and two-fifths to advertising, administration, commissions, and profit.

The Complete Real Estate Encyclopedia by Denise L. Evans, JD & O. William Evans, JD. Copyright © 2007 by The McGraw-Hill Companies, Inc.