Developers profit margin

Kaiser74

Hoping to start property development in a few weeks. Hope to purchase land/property and develope in South county dublin initially. I will sub contract the construction phase. What percentage should I put on the project as developer prior to sale on the open market? Thanks

mrawkward

stick on 10% for yourself and you will be grand.

L.Jenkins

Would 15% not be a better figure. Depending on how well the business venture goes, I assume you'll reinvest. Are you building a number of units, with a hope to sell or building to order? I hear building to order could mitigate some of the risk many fell victim to during the bust.

mrawkward

My comment was a tongue in cheek response... the business does not work that way. Key drivers are site cost and end product sale prices, both are controlled by external sources...every day it looks like the numbers get harder to turn a profit and as for a novice getting hold of a decent site in South Dublin, paying way to much is probably the only way, unless it is family land. I fear the OP is being naive in the extreme........

Bandara

OP is a complete fantasist

His other post about this last night is quite the Walter Mitty

Here we go

I know zero about this but I'd assume your guided by market force if build is 100k and house in that area that quality sell for 200k your profit is 100k excluding tax but equally if there selling for 90k you either hold on for market to improve if possible or your forced to sell and lose 10k

pedroeibar1

Here we go wrote: »

I know zero about this but I'd assume your guided by market force if build is 100k and house in that area that quality sell for 200k your profit is 100k excluding tax but equally if there selling for 90k you either hold on for market to improve if possible or your forced to sell and lose 10k

That's obvious. A quality house in South Dublin selling for 200k, forsooth!

whatnext

Have a look at the following just to give a bit of a feel for what is involved in property development. There is a little bit more than having a field, a builder and a ball of cash.

https://www.scsi.ie/policy_research/house_delivery_cost_calculator

https://www.scsi.ie/documents/get_lob?id=885&field=file

You don't put a developer percentage on a project. 
You estimate the costs, you estimate the sales prices, deduct one from the other and thats how you get your expected profit. 

As I property developer I can tell you there are not many harder businesses in the world. If you don't prepare properly for this you will lose your shirt. I am currently looking at moving back to Ireland to do some development there, but everything Im doing is stringently to minimize risk, absolutely nothing left to chance anymore. Lessons learned. 
How can you lose? 

1. Banks - you can get finance from a bank and they can change the goalposts half way through. I had a project where the bank agreed to finance the whole thing if we sold 4 houses. Midway through they reneged on that and said now its must be 5. So i had a bunch of people unpaid, huge project delay and so on. Banks are not your friend. You'll probably have to pay for an independent guy the bank will use to approve all the major invoices. A guy who knows F all about your project really but gets a nice cheque every times he signs a doc, and you must factor in interest payments on a delayed project and how they can eat into everything. 
2. Contractors - when you sub contract this as a person with no experience the contractors are gonna look at you and lick their lips. This lad knows F all they'll say to themselves, and so you will get overcharged because you don't understand the various construction techniques across all the different trades, delays -  they won't have enough staff because they are doing multiple jobs, you'll deal with underquoting to get the job because they will know they'll get you later to make up the difference. Etc Etc 
3. Permits - you might tick every box to get your permit and do everything perfectly, still doesn't mean you can go ahead. I had a case where the neighbors objected local, state and national level, all rejected. Then they threatened to sue the authority that gave the permit. Then the authority forced me to hire a bunch of additional consultants at a six figure cost to advise on work I had already completed, in order to protect the local authority. Not to mention the delay that caused
Thats the tip of the iceberg

Gloomtastic!

This poster came along here in another disguise a few months ago. FOS then, FOS now. :rolleyes:

duploelabs

Begs the question about format for queries on this sub, so many tire kickers who haven't done a tap of research and expect with absolutely no experience for all their questions to be answered here