development margin

[Shaneelastic]

What's acceptable margin for development.

I know there's if and but, but please explain your answer

Thanks

 

[Aaron_C]

Forty Percent.

 

[Bennny]

What's acceptable margin for development.

I know there's if and but, but please explain your answer

Thanks

That's a personal question. What do you feel is an acceptable rate for a term deposit? The development margin is commensurate with the inherent risk in a site.

ie: If you're buying a contaminated site in a remote location, you'd want a big margin.

If you buy a site with DA already done, in a good suburb, then you would accept a lower return.

Commercial banks won't touch a deal unless it's north of 20%.

If you can get north of 40% you've done very well.

All the big listed developers are running net profits of 2-8% generally.

 

[westminster]

What's acceptable margin for development.

I know there's if and but, but please explain your answer

Thanks

20% or more.
I have done with less but it was a holding development done to improve rental yield.
That 20% needs to be conservative - not 'oh prices will rise 5% during construction blah blah'
You also need 10% contingency which is not part of that 20%.

 

[RPI]

I wouldn't touch less than 20%, especially first time around. Unless you are contingency'd to the max your chances of coming in on that are low.

 

[MRO]

All the big listed developers are running net profits of 2-8% generally.

Really..?

I used to work for a listed property developer and hthe margin was a lot more than this. Obviously stuff bought pre GFC would skew the ultimate return but anything new getting looked at would have to be at 20%+

 

[Bennny]

Really..?

I used to work for a listed property developer and hthe margin was a lot more than this. Obviously stuff bought pre GFC would skew the ultimate return but anything new getting looked at would have to be at 20%+

Yep, really - net profit and development margin are not the same.

 

[oc1]

Forty Percent.

Fifty is better

 

[Erica]

First time small development aim for 20%, and your return will most likelly be 10% but you'll learn a hellava lot! Well thats what happened to me anyway

Next time round aim for 20% and ya might just get it, i hope so.