How does the national builder make a bigger profit margin than the local builder?
There are 3 main factors to consider:
-Building costs
-Real Estate Agent Cost
-Finance Costs
When we run the math in order to figure the costs for both the national and the local builder. I run a profit margin at about 12% for local and 20% for national builders.
Yes, a national builder has a higher profit margin but that is because they typically have buying power, in house agents and in house financing.
BUT…the math still works out to where the finished lot is worth about the same amount of money for either builder!
In the end, a finished lot is worth what a finished lot is worth. It’s only worth what the market will bear.
Here at VestRight, we teach you how to do the math on land deals in order to know what the profit margin is going to be. If you are interested in more information on what we do and how we do it, the best place to start is by watching our video presentation here: https://shrtlnk.co/KuwiM
Posted by Cody Bjugan – VESTRIGHT on Tuesday, October 13, 2020
How does the national builder make a bigger profit margin than the local builder?
There are 3 main factors to consider:
-Building costs
-Real Estate Agent Cost
-Finance Costs
When we run the math in order to figure the costs for both the national and the local builder. I run a profit margin at about 12% for local and 20% for national builders.
Yes, a national builder has a higher profit margin but that is because they typically have buying power, in house agents and in house financing.
BUT…the math still works out to where the finished lot is worth about the same amount of money for either builder!
In the end, a finished lot is worth what a finished lot is worth. It’s only worth what the market will bear.
Here at VestRight, we teach you how to do the math on land deals in order to know what the profit margin is going to be. If you are interested in more information on what we do and how we do it, the best place to start is by watching our video presentation here.
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