4 ms·

>> Why build 20 $50k homes on the land and make $200k profit when you can build 10 $500k homes and make $1mil in profit? I don't understand this comment. This

>> Why build 20 $50k homes on the land and make $200k profit when you can build 10 $500k homes and make $1mil in profit? I don't understand this comment. This is the same profit margin. You invest 1 million (20 * 50k) and make 20% (200k) or invest 5 million(10 * 500k) and make 20% (1 million). Depending on the amount of initial capitol you want to invest you may choose one over the other.

kbenson 4y ago
Because the constraints are time, getting Landon, getting permits, etc. Each additional house is more overhead from regulations you have to meet and permits, as well as area improvements such as roads that need to be made or improved, and more houses mean more roads and sidewalks. Even if they have the same profit, o ly one of those strategies scales to allow you to pump more money in and get more money out without significantly changing the resources required to accomplish it.
- tomcam 4y ago
  Landon never calls me back either. I should stop blaming myself for these delays.
  - kbenson 4y ago
    LOL, this was so confusing for a second. My son is named Landon, which is probably why my phone was so quick to auto correct to that. :)
archi42 4y ago
As a contractor or manufacturing company that's not what you're investing into. You build the machines and process and design the house. So in one case you get 200k out of the invest, and in the other 1000k. At least that's how I'm reading this. If you, as a single household, plan to build a 50k house on your land, you might be unable to find someone to build it for you. Of course in larger cities/projects with a single developer reselling units it's a bit different. As I said, that's how I'm reading it.
enragedcacti 4y ago
The land is a fixed cost regardless of what you build on it, so higher return structures will win out even if the margins in the structures themselves are the same. Also fewer jobs to manage, fewer customers to sell to, simpler sewage, water, gas, electrical to deal with.
- nine_k 4y ago
  It almost sounds like building one multi-tenant city building is more efficient than twenty single-family suburb homes.
  - drekk 4y ago
    Correct, although many municipalities (like Boulder, CO) have ridiculous zoning laws such that you can't make multi-story apartment complexes. So the choice for developers is just single family suburbia
    - UtopiaPunk 4y ago
      Single family zoning has become the norm in most of the United States. It's so broken. Even simple duplexes or quad-plexes are not allowed in most single-family zones. Homeowners benefit because it drives up the prices of homes, which has become one of the most important financial investment tools to normal people in this country.
bzmrgonz 4y ago
A burger has small profit margin, a complex meal has a bigger profit margin. That's what I think he meant. Venture Capitalist don't like nickel and diming.

kbenson 4y ago

Because the constraints are time, getting Landon, getting permits, etc. Each additional house is more overhead from regulations you have to meet and permits, as well as area improvements such as roads that need to be made or improved, and more houses mean more roads and sidewalks. Even if they have the same profit, o ly one of those strategies scales to allow you to pump more money in and get more money out without significantly changing the resources required to accomplish it.

tomcam 4y ago
Landon never calls me back either. I should stop blaming myself for these delays.
- kbenson 4y ago
  LOL, this was so confusing for a second. My son is named Landon, which is probably why my phone was so quick to auto correct to that. :)

archi42 4y ago

As a contractor or manufacturing company that's not what you're investing into. You build the machines and process and design the house. So in one case you get 200k out of the invest, and in the other 1000k. At least that's how I'm reading this. If you, as a single household, plan to build a 50k house on your land, you might be unable to find someone to build it for you. Of course in larger cities/projects with a single developer reselling units it's a bit different. As I said, that's how I'm reading it.

enragedcacti 4y ago

The land is a fixed cost regardless of what you build on it, so higher return structures will win out even if the margins in the structures themselves are the same. Also fewer jobs to manage, fewer customers to sell to, simpler sewage, water, gas, electrical to deal with.

nine_k 4y ago
It almost sounds like building one multi-tenant city building is more efficient than twenty single-family suburb homes.
- drekk 4y ago
  Correct, although many municipalities (like Boulder, CO) have ridiculous zoning laws such that you can't make multi-story apartment complexes. So the choice for developers is just single family suburbia
  - UtopiaPunk 4y ago
    Single family zoning has become the norm in most of the United States. It's so broken. Even simple duplexes or quad-plexes are not allowed in most single-family zones. Homeowners benefit because it drives up the prices of homes, which has become one of the most important financial investment tools to normal people in this country.

bzmrgonz 4y ago

A burger has small profit margin, a complex meal has a bigger profit margin. That's what I think he meant. Venture Capitalist don't like nickel and diming.