Will The Block make a profit?

A

Able

I just performed a very quick search and did not find this covered in a thread elsewhere but apologies if it already is. The Block is an entertaining TV show but i thought it would be interesting to run the numbers and see whether it actually makes any money as a renovation value add. Here are the costs (this is only rough):

- Original purchase $3.4m ($850k per unit)
- Buying and selling costs 8% $68k per unit
- Holding costs (say 10 months) $52k
- Common area upgrade (managed by the contestants) $100k, $25k per unit
- Common area upgrade other (bifold doors, new windows, etc) say $25k per unit
- Renovation and furniture $80k per unit (not including the bonus amounts for the winning room each week)
- Labour by contestants???

These costs total $1.1m with none of the contestants labour factored in. So Contestants need to sell for somewhere in the vicinity of $1.15m in order to break even. I dosen't stack up for me.

Regards
 
Hey OP, the auction was already held yesterday.
It was reported that 1 flat did not sell. It was under the reserve. Only one sold for above $1M at $1.1M.
 
I think the renovation numbers may be underwater, but add in the advertising revenues for all the product placement and I don't think channel nine will be making a loss on the show.

As mentioned elsewhere, they possibly had to pay more than market price to secure a complete block of units, and I read in an article that it was vendor financed, so that may save a bit on the holding costs.
 
Don't forget the stamp duty, I read somewhere it was around $168K.

The show would have made their money from product placement and advertising.
Marg
 
Hey, I bought a unit for $850k, sold it for $1.1M!! Sure I spent a little bit on it and worked my guts out, but I made over $250k!!

Isn't that how it goes around the BBQ? ;)
 
the average price, in the area, for a 3 bed unit was $800k. to pay $850k/ea for an dump requiring major reno was spending way to much.

perhaps they needed to spend that much to secure and entire block. perhaps it's time they looked outside sydney - brisbane, adelaide, newcastle :D ?
 
I'm surprised at which flat did not sell. I thought 'views' and being first floor would sell?!
I thought that the reserve was a little unfair. The boys had a reserve $40K less than John & Neisha who had a courtyard? How is that fair?
 
:) Funny how the "spin"works :)

My niece works for McGrath R/E
her Facebook quotes:

Go McGrath! Why would you sell with anyone else!!!
................

McGrath had the unit that won The Block and made the owners over $200,000 in profit where one of the others didn't even make it to $900k and was passed in! You should watch it online!



:) I restrained myself to comment on her FB
 
lizzie said:
the average price, in the area, for a 3 bed unit was $800k. to pay $850k/ea for an dump requiring major reno was spending way to much. ?
Click to expand...

After the first show the show was negotiating to buy a block on the Gold Coast. There were many corners cut in the first series (Bondi) as well as noise and access issues, and the Gold Coast Council made it plain they would require all approvals, work to be completed to standard and noise regulations adhered to.

They chose to go to Manly.

This series seems to be far more tightly controlled as far a quality control and consideration of neighbours (noise, blocking of access etc) goes.

I thought the reserves were rather unfair, I always felt the big courtyard was extremely valuable. Then again, I don't know Sydney values very well.
Marg
 
agree - a large courtyard was going to win every time over a pokey balcony with glimpses of blue in the distance the the trees (supposedly ocean views - haha).

as for the one that didn't win - couldn't happen to nicer people :rolleyes:. even when they started editing to make chez seem nicer she still got on my nerves - but in fairness, the appartment was a mish mash of styles (those doors!) and rather odd. hope they weren't relying on the winnings to pay for the ring.

i think the best marketable, practical appartment won in the end.
 
lizzie said:
agree - a large courtyard was going to win every time over a pokey balcony with glimpses of blue in the distance the the trees (supposedly ocean views - haha).

as for the one that didn't win - couldn't happen to nicer people :rolleyes:. even when they started editing to make chez seem nicer she still got on my nerves - but in fairness, the appartment was a mish mash of styles (those doors!) and rather odd. hope they weren't relying on the winnings to pay for the ring.

i think the best marketable, practical appartment won in the end.
Click to expand...

agree the collingwood magpies colour scheme was kind of odd for that apartment that got passed in.
 
hi all
maybe ask the show as it was a renovation show to show the real numbers
and work out the four groups labour costs at say 10 per hr
do a true spread sheet as it was to be a renovation you need to know you covered your costs
they could get placement of the accountants that do the feso
for me its not did it make a profit its does it meet what it said it was a reno show
and the major part of a reno is cost and will you do your shirt
 
grossreal said:
hi all
maybe ask the show as it was a renovation show to show the real numbers
and work out the four groups labour costs at say 10 per hr
do a true spread sheet as it was to be a renovation you need to know you covered your costs
they could get placement of the accountants that do the feso
for me its not did it make a profit its does it meet what it said it was a reno show
and the major part of a reno is cost and will you do your shirt
Click to expand...
How come these reno shows never talkin after tax dollars,maybe it's something that they miss:rolleyes:,and i'm 100% sure the unless the rules changed overnight the "ATO",will be in the line-up waiting as they always do,..
 
willair said:
How come these reno shows never talkin after tax dollars,maybe it's something that they miss:rolleyes:,and i'm 100% sure the unless the rules changed overnight the "ATO",will be in the line-up waiting as they always do,..
Click to expand...

After tax is different to each individual's circumstances. it's still quite early in the tax year till june 2011. the couple who won 200+K could buy an IP and then pay the interest in advance for 5 years thus offsetting the CG. Or take a deserved 1st class holiday to a seminar related to their profession. Better to make the CG than get your property passed in. At least they got options.
 
Melbournian said:
Even better - so it's considered like gambling? no tax on it?
curious to find out.
Click to expand...

Back .. ages ago when I was in uni for Tax, i remember they were talking about game show contestants not being taxed. And there was an argument on someone who kept appearing on game shows like Sale of the Century and several others in the same year then it would appear he is making a living from appearing on game shows.


Snip from ATO. http://www.ato.gov.au/content/downloads/P031S-Q22.pdf
Do not include
prizes won in quiz shows if you are not making a living out of
appearance fees or game show winnings.
Click to expand...
 
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