Attn Developers – What PROFIT margin is a goer?l

From what I have heard, you should be looking for 30% and up when developing otherwise banks don’t tend too keen.

I haven’t developed anything myself yet but looking for the highest possible outcome would be my goal, so aiming for a 100% and more profit would be ideal. LOL.

But different horses for different courses and if you feel that the 20% being made will be a substantial gain for the effort input, then go for ya life.

Cheers,
Jacob.

‘Stay Happy and you’ll be Perfectly Fine’ – Jack

hi all
couple of things.

returns from developing are between 15% and 35% and are basically by risk factors.
giddo I run to different programmes for my business and they give me to totally different returns but they also run different interest rates and different ways of looking at developments.
how well do you know your bank manager.
he runs one of the programmes I run he/she(sorry to be sexist) can tell you your return.
post on here your costing (as dazzling and few don’t like me telling people to email me)and I will give you a couple of options
as a gross realisation loan 65%
as a 80% lvr loan construct ad land
and complete 67%construct loan.
these figures must not be construde as a loan or an indication as a loan by will be very close to the figures thou.
I won’t go lower then 15% and only at this level for tax purposess.
i need land value
build cost fixed price if possible
resale value
interest rate (not needed but if you got it hand)
term to build.
look forward to reading

here to help

hi giddo
have chat with the bank manager
here it is
sell price 450,000
selling costs 11,250
gst 23,636
total revenue 415,113
construction
180,000
contingemcy 9,000
professional fees 13,500
interest 38,000
devel costs 240,562
if you are buting this site at that value it is a minus return any thing over 90,000 for the land and it doesn’t work.
normal lend

gross realisation gives me
263,914 minus build gives me 23,352 for the land
gross doesn’t work
costruct loan at 95% gives a 145,159 to break even

simple calculator

450
minus
180 and 190 gives 80 less interest 40 and you haven’t taken out gst, solicitors, stamp duty,legals or contingencies
sorry to be the proveyor of bad news put I think you need to trim this some were

here to help

Hi all, I’m a virgin poster and just read this thread and sounds like i could be half way through an investment that might not stack up. I’ve listed the details below and can provide more if needed. In a nutshell, I’ve just bough a big block 900sqm with a 3 br house on the front, community title hammerhead devision (small costs), 3br, double carport 141sqm house on the back.

Cost of land 280k + 15K in buying costs
Build Cost 130k + 15K landscaping of both
renovate on existing = 10K
Value on completion 270K front
350K on back = 620K
Int rate 6.8%
To Build 12 months
current retun of $8800 from existing house’s tennents.

Inially I wanted to buy and hold but after reading steves book and some posts I’m not so sure.

My loan broker and i have done the sums and, with tax benefits, it’ll cost 5K to hold each year

Grossrealiastion, it sounds like your the man, can you work these figures?

hi giddo
Ive seen your website and reading your post I can understand what you are trying to achieve and I agree that you must spend money to make money and not rely on bank figures.
If you can use the properties for your business the value changes which I can’t calculate.
cost don’t go down so I’d bite the bullet and build and expand your business,
But thats my view not as a funder but as a business capitalist as a different section I take run down business and reform them so I understand your position.
The figures I gave your are from a profit to build and sell point of view.
non of above is to be taken as finacial advice or to be debted against.

here to help

g’Day Gross,
my broker said that to only cost 5K per year to hold 600K approx worth of property was damn good. I guess that he has seen too many negative gearing deals:) although that was to buy and hold, Im leaning more to selling them now.

I feel like i have broken many rules that steve has said in his book, so i’ll be happy to come away from things with my head above water and of course the lessons learnt.

I’m curious as to how you came to the 19%. I stated the costs as 440K and selling price at 620k what else should i factor in???

thanks Gross,
Are these programmes ones that you have purchased or self devised?

what about taxes?

When looking at a development site, how do you project the…
1. stampduty cost ?
2. Capital gains tax ?

whats the simple maths of it?

kind regards