That leaves me with 40k margin minus say 10 percent selling costs.

This just seems like a mediocre to margInal Investment that turned out reasonable due to appreciation

Selling through traditional means could mean a 3-4% commission on sales price and that would seem like a lot on a flip property that might already have a average margin.

We don’t mind another condo, the problem is the low margin..

I would think that a small negative cash flow margin would be acceptable due to the much larger equity gains you are receiving (compared to a 100k property that has good positive cash flow).I would love to know your thoughts.

There has to be enough margin to get it done. 

What is a developer's typical profit margin?

RE is always local, but the rehab deals in my area a nearly impossible to find unless I'd lower my margin...I generally use the 70% rule. 

This property had some slimmer margins that I didnt think would support the cost.

One is a low risk,  low margin strategy.