I'm doing a feasibility study for a townhouse development at the moment.
What percentage of the total building cost (as calculated from Rawlinson's cost guide) should I allow for the builder's margin?
What kind of margin do small builders work on usually?
Thanks
Are you talking margin only or preliminaries & margin? Prelims includes supervision, non-trade labour, rubbish removal, setout, progressive cleaning, insurances, safety equipment, temporary services, site fencing, access, council inspections and plenty of other costs.
Profit is a % charged over all the costs of construction.
What would you be happy with?
Hi Scott
I guess I mean – If the actual building cost, in terms of a per square metre rate, as taken from a building cost guide, is $300,000, how much on top of that would a builder make?
Sorry if I'm not making much sense.
I've heard it said that developer's profit margins are usually about 20%, or that's at least what they aim for. Just interested to see what builder's margins are.
Probably be adding between 15-20% on those figures as Rawlinsons rates are for the trade work only.
The historical benchmark builder's margin adopted by insurers is 16% gross margin, which id probably pretty close to the mark. This margin is built into the builder's pricing and is generally not expressed explicitly.
This margin is, of course, nothing to do with the developer's margin which is generally targeted at 30%.
So, if you as the developer purchase land for say $600,000, engage a builder to deliver three townhouses for $600,000 ($200,000 each), and sell the completed dwellings for $1,800,000 ($600,000 each), then you will have achieved a gross developer's margin of slightly greater than 30% and the builder will have made his (or her) margin within the building price.
alfrescodining wrote:I'm doing a feasibility study for a townhouse development at the moment.What percentage of the total building cost (as calculated from Rawlinson's cost guide) should I allow for the builder's margin?
What kind of margin do small builders work on usually?
Thanks
Hi alfrescodining.
i have been using the information and feasibility software ii found on realestatesdevelopmentcoach.com
the feasibility study is in excel and will show you step by step detail how everything is laid out when breaking down costs…i didnt know alot of the costs involved until it was already pre-laid out in front of me. it also helps produce a month-by-month estimate of construction costs, development costs, development loan utilization and repayment, project absorption and other costs associated with my project
there much more detail i can say…but hope it helps!
all the best in your endevour,
Cheers,
Jillyes always – 16% – 24% in this market the lower
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