Acceptable Profit on Development

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Keymaster
@piadmin
Join Date: 2013
Post Count: 3,225
May 1, 2003 - 9:51 am
What would the acceptable profit margin on a development project of units? Anybody have any steadfast rules on percentage return for risk?
Cheers
Canuck
dr house
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@dr-house
Join Date: 2001
Post Count: 281
May 1, 2003 - 10:22 am
Interesting question, I think developers have high risk and therefore have high profit margins.
I am sticking to developing my suburban backyards, so I know roughly my profits, risk and my choices are high in terms of keeping the backyard land and building, selling the land or keeping the backyard and selling the fronthouose or keeping the lot.
Terryw
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@terryw
Join Date: 2001
Post Count: 16,213
May 2, 2003 - 6:17 am
Go for at least a 25% margin. There are always going to be cost blow-outs and unforeseen expenses, so you need this much to make it worthwhile
Terryw
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trueblue
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@trueblue
Join Date: 2003
Post Count: 142
May 2, 2003 - 7:06 am
My property developer mate tells me it’s closer to 30%. This apply to Perth properties. Not sure what is the rate on the east coast.
B.Deros
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@b.deros
Join Date: 2003
Post Count: 34
May 2, 2003 - 7:27 am
Some developers just want to keep their builder mates busy when the housing economy is quiet