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When doing a feasibility study on a project, do you calculate the value of the land on it's current value or what you paid for it? What I am trying to say is if for example you purchased a block 15 years ago for $100,000, and today its worth $500,000. If you decide to build a duplex would you portion $50K to each townhouse or $250k?
I hope this makes sense
Thanks Serendip that's what I thought too. Which leads me to my next question. What's the point in land banking a development site?
Real world example. My brother in law bought a corner development site (big block with old house) on the Gold Coast. His mate bought the exact same thing except one block north. My BIL developed his and his mate rented the house out and did not develop. They both sold at the same time. After tax, my BIL lost money on the deal. His mate sold his and made a decent profit. In some cases you can make more money by not developing.Thanks Serendip that's what I thought too. Which leads me to my next question. What's the point in land banking a development site?