SI
SI
discoversearch

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor.  We ask that you disable ad blocking while on Silicon Investor in the best interests of our community.  If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.
Strategies & Market Trends : Mish's Global Economic Trend Analysis
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  
To: mishedlo who wrote (7336)6/1/2004 2:13:35 PM
From: AugustWest  Read Replies (1) of 116555
 
Thanks
That is shedding more light on the subject
But reading down towards the lower portion of his post, and already knowing a builder is content with 10-12% profits...

Let's now look back at the effect of land costs at the end. Of the $375k final cost, the raw land is (33/375) 8.8% of the total. Now let's say you over bid the farm by 50% (a very high number). You raw land now goes to $49,500 or (49.5/391.5) 12.6%. So if you pay a full 50% over the real value of the land you are only cutting out 3.8% from your profit and that assumes your projection is wrong and that the houses don't appreciate between the time you tie it up and finally sell the house.

Okay, assuming the worst case he mentions, first problem I see is if my profit margins are cut from 10-12% to 6.8-8.8%
That is going to affect the bottomline profits considerable.

Secondly, he is assuming a 50% overpayment for the property
Yet in the post I initially responded to they were talking about paying 300% over appraised prices and(in the other instance) 46% over last year's prices.
So if the mrkt just remains flat for 3 years
Than he's jacked his miscalculations to 100% annually.
Or double the margin of error figure he used to afford a cushion. Perhaps though money will continue to fall from helicopters.

I see Elroy has posted on this also
And I am going to read his post too and see if it dummies me up any WRT to the options thing Sploto mentions.

Of course, something inside me is shouting I have this all wrong and how I can even come to the numbers I'm using is in itself telling and scary at the same time.
Methinks I should just keep smiling pretty and rely on my good looks to carry me through<GGG>
Report TOU ViolationShare This Post
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  

HomeMailHotSubjectMarksPeopleMarksKeepersSettings
Terms Of UseContact UsCopyright/IP PolicyPrivacy PolicyAbout UsFAQAdvertise on SI
© 2026 Knight Sac Media.  Data provided by Twelve Data, Alpha Vantage, and CityFALCON News