The real estate market is undeniably growing with supersonic speed, with investors making huge investments in it. For the most expensive projects, inverters approach banks and other commercial institutions for financing. They either rent out or sell the finished units to clients, and they pocket the margins. Either way, they make good margins, no wonder many people are currently into this business.
But how do you determine a new condo price with many savvy developer who priced their new unit? Others, out of lack of knowledge, undervalue their condos fetching little profits. Either way, both extremes are dangerous and can lead to losses and even keeping off potential clients.
Here Is the Way to Estimate the New Launch Price
For the new launch projects, this is basically how to get the price: Add up all expenses plus margin.
Expenses include land cost, construction costs, among others.
Construction costs + Land costs + expenses + profit margin = New launch price
So, it follows that the expenses incurred by the developer determine the new condo price.
The first cost to incur in the construction of a house is the cost of where to host your condo. The land comes at a huge cost, depending on many factors. The cost you incurred while acquiring the land should be used in determining the finished condo price. Be sure to set a price that will compensate you total land cost.
As already indicated, many investors use bank loans to finance their projects. The financing always comes at an interest—banks are also into business. So when the investor is selling a new condo launch, they should keep in mind the financing cost incurred. The launch price should seek to recover the loan used, along with its interest.
After acquiring the land, then comes the real work; construction process which heavily costly. Think of architects, contractors, different laborers, and other costs which aid the construction process. Many are times construction costs are huge, especially for those who value quality works. Also, think of the construction materials for construction which fall under this category as well. All that should be captured when determining the cost of the new launch.
A real investor will always incur administrative costs. For example, wages for the staff who helped with construction processes–advertisers, supervisors, maintenance staff, etc. All these costs should be considered in determining the new condo price.
Marketing and sales costs
Upon completion of your units, you will have to advertise them. You will incur marketing costs before you start making sales, or before any serious client checks in. These expenses should get consideration when setting the price for the new property.
The new launch price is most effective in a stable financial environment. If the price of land, for instance, changes between construction time and price launch, the developer should review the new condo price in order to secure benefits accordingly.
The above costs are basically the determinants of the new condo price. Be sure to have accurate cost figures to help you set the right value for your new property.