Hi I am just starting to get into a new project. I am in the process of buying some land to then develp some unit on it and sell.
However I am very new at this and need help in how do we come up with a profit margin and how do I know if the contractor/arch is giving me numbers that are fair as well as making a contract that is good for both parties/or all parties involved.[blink] Any help would be appreciated as well as any directionSansue,
From what I understand most developers look at a profit margin of 25% plus. You can get a quantity surveyor to estimate building costs.
I would also like to add that if you have to ask these questions you should seriously reconsider if developing is a good option for you at this stage. A lot of novice developers lose money.
Regards
AlistairAlistair…Thank you for your help…..I know its crazy for me to try this but I have to start somewhere and I know I will have many mistakes that will cost us because I am not alone…But I really want to learn!!!! Do you have any suggestions on books or workshops I can do to learn……or any great advice on how to dodge as many mistakes as possible? thanks crazy
I do this and I recommend the following.
Whoever you use, contractor/arch get what they are suggesting it and take it to your local estate agents. They will tell you what they think they can get for what you are proposing to build. Don’t speak to one.
You will soon learn if your project is viable.
Another good point in my opinion is finding out what the land alone would be worth.
For example, I have a block of land which we were going to develop, after more research what we did was get a house approved on that land and sold it as a house and land package. We didn’t have too build and the builder has a contract with the purchasers. WE got our profit on the sale of the land, reduced our risk and speculation on actually having to build and sell.
Just an alternative for you too think about.
Goodluck.
Byronent
Adelaide SAGreat….I will do it….thanks for the advice…anything you think about at any time pls feel free to share…..me
Hi Sansue,
I’m not a developer myself, so I can’t give you a great amount of advice. There are a number of comapanies around that offer a turn key type product, where they arange all the plans and permits etc, manage the building ant then hand it over to you at the end. They should give you a set price at the start and a good idea of timing. This would reduce the number of variables in the equation.
Peter Combden, who is a moderator on this forum runs property development training sessions I beleive. I don’t know much about him though.
Regards
AlistairThanks Alistair…..
Hi all,
I was down in Brizzy and picked up an informative little book on prop. devlpt.
‘An intelligent guide to Australian Property Development’ – by Ron Forlee.
Im only quarter way thru it. So far it has given me an insight to developing and im realising that there are alot of aspects to cover for any development.
Bloody good book. Maybe someone can add to this.[cap][cap]Why did you buy a property with out doing the numbers first.
First rule in property developing is to do the numbers.
Second rule is if the numbers dont work dont do the development.
Are you for real?????
I did my numbers before buying and it was right and very worth it…..but I wanted to double check and make sure I was on target…..Because I am new…I am learning and I just want someone to point me in the right direction with a good profit percent and compare that to what I had worked out ……
So why did you buy mate, you don’t make sence to me … buying a property then checking the numbers.
Sorry for being rude but i really don’t think you are for real at all. you architech and accountant could have comfirmed that before you bought.
Give me the address and i will check it out for you oh and the name you bought it in …
Phil
Resiwealth you might find that sansue6 property might be a bit far away he is from the USA so it might be a bit hard to check out. Also I think you were a little hard on him there is every chance that he is telling the truth . He may just want peoples thoughts . I know that I always ask for peoples input weather they no any thing about the deal or not . You can never have to much info
Cheers Rick[drummer]
Originally posted by sansue6:Hi I am just starting to get into a new project. I am in the process of buying some land to then develp some unit on it and sell.
However I am very new at this and need help in how do we come up with a profit margin and how do I know if the contractor/arch is giving me numbers that are fair as well as making a contract that is good for both parties/or all parties involved.[blink] Any help would be appreciated as well as any directionIn which state do you live?
We provide a development project management service for clients just like you who want to become developers.
have a look at http://www.metropoleprojects.com.auMichael Yardney
METROPOLE PROPERTIES
Author of Australia’s leading property e-magazine.
Join over 10,000 readers each month.
FREE subscription http://www.metropole.com.auResiwealth,
Arrogance will get you nowhere. We are here to learn not to be ridiculed.
Hi…Thanks for all your help…Resiwealth let me start over for you….and remember I am new and I did write on this forum thinking I could get some feedback and some helpful advice and my questions will at times be very basic to some that have been through it before….
Rick is very right…I am in the U.S. I do live in Miami, Florida…and I love all your inputs please….
I have not bought yet…I am looking into buying some property that will be knocked down and the land will be used to build and sell 2/2 condo’s.
The 4 building are being sold for 3.7….estimated cost for building so far from the bids has been 6.3 and selling or the new units will be about 460k….about 30-40 units in all. Now here are some of my questions….If I go in this deal with investors How much profit is a fair and usual profit that an investor can make lets say they invest in incraments of 100,000?
what do the developers or development managment make in profit? and what does the architect and contractors make in profit……I guess how does the profit from selling the units get split up between all the people involved?
Now I am asking before making any decisions? and dont forget Miami prices are out of control right now………I hope I can ask these questions in a safe space here on this forum??? thanks againSansue6
Go to the finance forum and look at a post I put in under HOW TO BORROW 2 MILLION . This will give you an idea of a situation I was in an what I did . it might be on the second or third page of the forum . Let me know what you think. If you need more answers let me know
Cheers Rick[drummer]
Thanks Rick……alot[buz2]
No problem mate [drummer]
One needs to be cruel to be kind, this is real life stuff if you blow your money its gone forever.
I have been developing for 15 years since I was 25, so yes mates I am hard, for a reason.
Most of you guys on this forum havent been exposed to interest rates over 12%, don’t think it will happen to you??? lets see.
Phil
Phil….I understand I didnt take it personal and I do appreciate your help…..your right its hard out there and I will try my best not to loose my shirt….I will keep you up to date on things Deal?
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