Rookie Developer article

[oc1]

Blacky, it is my deal
Negt, there is many strategies. some suit some, others suit others, as pointed out by Feradd.

but just one point, I dont pray for anything. thorough, very thorough research & due diligence!

C'mon Troy, you know us developers just fluke the results.

 

[fernfurn]

How do you go taxwise on this. Are you full time developers and just add the profit to your annual income?

 

[troynbec]

yes oc1, we are just lucky... time after time after time
furnfern, it operates just like any business, money in, money out & pay tax on profit. Best to speak with an accountant you knows property developing

 

[TMNT]

yes oc1, we are just lucky... time after time after time
furnfern, it operates just like any business, money in, money out & pay tax on profit. Best to speak with an accountant you knows property developing

are all your sales figures calculated on ex gst prices right? ie sell a dwelling for $500k, = $454+ GST (ignoring margin scheme)

 

[Kent Cliffe]

For me it comes down to ROE more than MDC.

The 16% MDC can be cut an diced 2 ways.

Commercial Lending:
Most lenders will want skin in the game for 65%-70% of the constructions cost so that's about $420k equity and $224k profit or 53% ROE.

We wont get into GRV lending.

Residential Lending:
At 4 units some banks will gear up to 80% meaning $280k equity and same profit, so the ROE is 80%.

It can make more sense to stay in residential lending and take a lower profit than to deal with all the extra complexity and lower gearing of commercial funding.