Milbank Avenue still draws optimists
I see that yesterday two adjacent properties on Milbank Avenue, 196 and 198, went to contract. These are tear-down multi-families so I assume that a builder's planning condos on the site. Asking price for each lot was $1.6 million and, while asking and getting often aren't the same thing, it's encouraging that someone still has enough faith in the Greenwich condominium market to go to contract on this land.
The devil just whispered, "a fool and his money ..." but that's just mean.
Update:
The sales price was just announced: $1,250,00 for each lot, so about 22% off asking price.
1 year ago
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2 comments:
I apologize for asking a stupid question, but what is the normal (typical, usual, hoped for?) profit margin when a developer buys a piece of land and builds a house? Is it normal to make 20% or do they often make 100%? I understand why the Milbank lots almost demand - at that price - multiunit construction to be profitable. $3.2 million for the land, pretend another - what? - $1.8, $2.8? million in construction (just trying to keep the numbers round). $6 million all in for 4-6 units? Do they price them combined at $12 million and attempt to make 100% or at $8 million and be happy with 33%?
Single family homes I have a feel for but I'm clueless on condominiums. Let me check with my builder friends before I answer either question. I will tell you that the old rule, "1/3 for land, 1/3 for costs and overhead and 1/3 for gross profit has been eroded as the price of land in Greenwich soared. But maybe it's making a return.
And note update - the Milbank builder has sunk $2.5 million into the land costs, not $3.2. So he's not so dumb.
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