Ashwin,
Few questions -
1) Is the developer assessing ur land value at 15% of total project cost? Do you also pay for anything else like development fee?
2) Do you need to guarantee for the construction loan?
3) Does the developer also responsible for sale/leasing of the property after construction is over?
Assuming your lot will have Class B/C building, the construction cost will not vary much on a premium lot in a urban area vs suburbs but the lot cost can vary significantly based on location. The % of lot price in whole project makes a huge difference.
I would ask for equity equivalent to ~150% of current fair market value of the lot. If the lot value is $100K and the overall project cost is $1mil, I would ask for 15%.
Developers also over-state development costs to work out better for them. Do your due diligence carefully before u select a partner.
