Building subdivision upscale houses

[Joel Owens]

So I was curious as to building new homes. It seems they are making a comeback in my area again.

I might buy a lot in an existing new subdivision from a developer.

The question I was wondering is what is the average profit margin per house and turn time??

The lower end areas here are 200k houses. In other counties an average house might go new for 500k or 600k. I was wondering if margin stayed the same with a more expensive house. The sq ft is a little bigger and I know the lot will cost more with higher end finishes.

I was wanting to know though if say on a 200k house you make 20% return do you still make that on a 600k house or does the return start dropping to say 15%?? If the number drops as you go up it would seem your capital is more exposed for a reduced return on your money.

What taxes per year do you pay on building houses versus buy and hold?? Just looking at various things to research more. 

How much down on a residential construction loan for about a 600k house when resold??

[Jay Hinrichs]

@Joel Owens

  30 to 40% returns are not realistic if your talking about profit on gross sales price.

now if your talking leverage and cash on cash then we do 100% and better all day long every day...

So for me

I borrow from bank at 90% of cost.. so say I have a 200k all in project that would be for a 265k houses.. bank loand 90% of cost not to exceed 75% of appraisal ... so 20k out of pocket.. interest reserve build into loan... 10% for soft costs are 26k bring it down to 240k and there is usually 10k of Ut oh.. and net is about 30 to 35k or 10 to 15% of gross.. or 100% plus cash on cash.. the idea in building is you need volume.. so your closing 2 or 3 a month then your making some decent money.