Hi SC
My guess is that when you were developing that particular market was not rising.? Still made a profit though.
Its a different ball game when you are developing in a market that is rising, profits of 20% can easily turn into 40%, when you are building 3 or 4 units the results can be quite staggering. The effort is well worth the reward.
Just to give you an example one of Westminsters projects Gwellup, 4 unit development, almost completed will make a profit of around $850,000, 12 month project I think? That's pretty amazing in anyone's books.
MTR
They were very profitable both giving over 100 % profit . Profit well over 1 mill and rising on the second . Second gave us our current PPOR , probably up 500 K in the last six month . Not bad for doing nothing . However The first one stopped us from buying in Mt Druitt at a time you could buy properties for 60 K that then went up to 240 and the second one kept us out of Geraldton at a time when Karina was buying for around 60 and they went up over 200 as well . She sold enough over there to buy her PPOR on the northern beaches for cash . NOt bad for someone still in her 20's ( from what I recall ...) We considered both these options but didn't due to our existing financial and time commitments.
The second one also had us selling some of our rocky IP's earier than we wanted to . Sure we could have refinanced and drawn down equity but that would have stretched our Sleep at night factor , and would have left us fully stretched us when the GFC struck and no way we could have been buying in Mosman at the peak of the GFC as we wouldn't have had i mill available in a LOC to go around making cash offers when the banks would hardly lend anything.
The reality is there are different ways to make money . Just because you're into property doesn't mean you have to logically end up developing.
Knowing what we know know , I know we could have made more in the last cycle by not developing and by buying in Mt Druitt and Geraldton and holding longer in Rocky , and it would have been less stressful . BUT we did ok by Developing . A retrospectascope is a wonderful instrument .
Cliff