I am looking to work on a construction project in Chicago by purchasing land and developing condos/retail stores. I was wondering if anyone had experience in this arena?
Are you developing full time? I just developed a subdivision, and it is not easy to do unless you are experienced and have time to look over all the details. I have another job and mine came out fine, but I could not imagine developing a strip mall with no experience. Good Luck!
Well, I have experience buying, selling and rehabbing real estate, but I would like to look into development. BTW, what kind of profit margin are we talking about?
What sort process did you go through and where did you do the development, Chicago?
How did you find the land and what sort of construction did you do, etc? Please elaborate.
I purchased a raw piece of land which adjoined an existing subdivision. The land was in central Kentucky in an area of medium growth. The profit potential varies depending upon how much of the work you do yourself. I found that the man who I hired to do the project (streets, sewer, grading, etc) was nothing more than just a broker who hired out the jobs to other firms, which I could do myself next time. The profit margin on this project was right at 20%, and could have been higher. I think that my lots may have been a little under priced, but they moved fast.
The profit margin was only 20%? I thought it would be alot higher for taking the risk of developing land. How much did the whole project cost and what did you make on it?
I am working on a development project with some builders at this time. Here is how the numbers break down. The development is 50 acres. We are putting in 50 houses. The cost of the land is 500K, and the development costs will be at 1 million for a total development cost of 1.5 million. Our lender is giving us 75% of development cost at closing (1,125,000). This will allow us to pay off the land in full and still leaves 625K to start the development. The lender wants to be paid in full by the time we are 65% of lots sold; which means that by the time we have sold 33 of the 50 lots we will have the lender paid off and be working from our own profits. The lots will sell for 50k a piece. If you divide the 1.125 Million by 33 it comes out to $34,090. We are selling the lots for 50K. So on every lot sold for the first 33 lots we are clearing a hair less than 16K (in profit after paying the lender) for a total of $528,000 which we will then apply 375K to finishing the rest of the development. leaving about 153K in profit before we sell the final 17 lots at 50K which will be all profit. This gives us a profit of a little more than 1 million dollars after the development is complete. The best part about it is that we have to come up with money to get the master planning done, and the rest of the money comes from the lender, and then from the profits on the land. Totally sweet deal. The profit goes up even higher if the builders keep some of the lots and actually build on them.
Greetings from chicago!!!
Can discuss with building condos in chicago, very difficult todo especially for your first time. Have to go thru alot of loopholes etc… to even get the permits and approvals…
Would suggest doing what we have done in chicago. Found inexpensive vacant lots and put up three flats alot easier to do. Have five buildings up, with another five to be completed by summer.
Can put you in touch with are people to if you are interested in doing something like this.
Again, building 3 flats is alot easier than condos, less headaches, easy approvals and great money$$$
Steven M. Schlidt