Joint Venture – 6 Townhouse Development Deal with Client

About The Client: A mortgage broker with a good business turnover, and wanting to leverage the services of an experienced property developer and investor to gain instant equity and grow his property portfolio. Currently have 5 cash flow investment properties.

  • Strategy: 6 Townhouse development. Old house on a large block of land overlooking the lake. Demolish the house and build 6-townhouses and sell all. Acquisition and construction costs share with the client and MPCA. MPCA provides the expertise and manages the project from acquisition to sales.
  • Profit Share: 50/50
  • Location: Lake Macquarie- LGA.
  • Land size: 1669M2
  • Zoning: R2

Let’s Talk Numbers

  • Asking price for the house + land: $570K
  • Offer & purchase price: $600K.
  • Offered: $30K more due to multiple offers- Deal still profitable.
  • Total Purchase costs, planning & construction: $2900Mil
  • Sale per townhouse: $650K X 6= $3900Mil
  • Profit before costs: $1000Mil or 34% Gross realization
  • Profit after all costs: $700K or 24% Net realization or $350K profit split.