Profit Margin on Perth Developments

Just curious for all the perth property developers, what sort of profit margin would you settle for or are achieving in Perth currently?

Just trying to compare before I dip my toes to assess the quality of the deal...
 
Holding or flipping?

To flip I'd want 40%, to hold 20+% (rent to cover everything plus ++)

I am hopeless tonight at using the calculator - I've just stared at it for a good 5 minutes and it's not doing what I want. Probably because work called me in to fix something and my mind is still thinking about that.

Westminster: cost 900k, value 1.2m
Gwelup: cost 1.9m, value 2.4m (today's rates, it's not built yet)
Highgate: cost 1.1m, value 1.5m

My project aim is for rental yield, equity and hold. The cashflow from Westminster is paying the holding costs for Gwelup.
 
I'm wanting to flip and use the spare equity to the invest for holding income but crunching my numbers and it looks fairly tight at the minute, 15%-20%.

If you're achieving more, where did you get the gain? Getting good deals on buying? Reduced building costs? Higher selling prices?
 
WM - all yours are between 20-25%

Yokine was meant to cost $2mil with an end val of $2.550 (22%). I did a few quick sums and if things get off the ground now I will scrape about 2% :cool:
Holding costs pending. :(

xplosion - Im assuming your 15% is pre-tax? In which case I would say you are too short.

If anything goes wrong (and trust me - it does), your profit (and then some) vanishes.

Flipping is also a bit risker because you lose 5% on the way out in selling costs, plus you then pay tax on the profits.

The gain depends largely on the project. Buying right is obviously key.
From what I have seen it is difficult to get duplexes at the moment to work. Every man and his dog are buying them, and the prices are therefore inflated.
Even triplexes are becoming difficult - however, there is still plenty around if you are patient and look carefully.

Its difficult to influence the selling price - you are never going to get $1mil for a unit in Balga. Match and spec the property to the market.
You can reduce the buying price to a degree, but this too is limited.
You can manage your building costs
You can reduce your holding costs by increasing the turn around times - but this can be influenced by things outside of your control.

However at the end of the day - it costs what it costs and it is only worth what it is worth. If these numbers dont work on paper, they will never work in reality. Go find another deal of a lifetime.

Blacky
 
I'm wanting to flip and use the spare equity to the invest for holding income but crunching my numbers and it looks fairly tight at the minute, 15%-20%.

If you're achieving more, where did you get the gain? Getting good deals on buying? Reduced building costs? Higher selling prices?

I'm using my holding properties to pay holding incomes to the next project - not flipping at all. There hasn't been enough capital growth in my opinion to sell. So I'm holding IP 1, 2 and 3, and 1&2 are providing funds for 4, 5, 6, 7 and 3 is providing deposit for 8,9,10 and I'm supplying holding costs for those.

I probably will sell one of 8,9,10 but its a long way off so I will see what happens.
 
Doing a duplex in Perth now.

Land + 2 buildings + subdivision/site costs etc just under $1mil, final value $1.2 - 1.3mil, and I will be living in one for several years as PPOR before selling it off. Rental income from the rear will cover all interest costs.
 
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