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Sales at The Groves in Orchard Hills slowing down?
- Thread starter raisingboys
- Start date
NEW -> Contingent Buyer Assistance Program
Yes, there will be thousands of more homes at Orchard Hills Village (at least according to previously TIC plans). But they're in this for the long-haul. OHV was never meant to be a fire sale to be built out and sold in a year or two. There is a multi-year game plan, and TIC can afford to sit and release homesites to developers as market conditions warrant.
Standard deal sub-developers get from TIC is
6% = Max allowed profit margin
70-75% = upside portion that goes to TIC when sub-developer margin exceeds 6%.
Typically, the phase 1-2 base prices you see are set to hit that 6% profit margin. Upside comes from price increases, but mostly accrues to TIC.
In determining margin target for the sub-developer, the following assumptions/allowances are typical
~8-9% for overhead expenses
~$100psf cost for construction
Land cost is huge. When you back into the numbers for TayMo Capella, you get to about $200psf for the lot. Similar for most of Groves.
Lots at CV and SG would prob be in the $160-180psf range if they were being built by sub-developers.
I believe 5P deals with their sub-developers in Irvine are very similar in nature, but just left a little more room for upside in PP.
Just indirect info
Really good info! Thanks ob1!
irvineboy said:To think they are releasing more homes up the hill. They aren't even selling the current ones well, except Trevi, Amelia, Capella.
Yes, there will be thousands of more homes at Orchard Hills Village (at least according to previously TIC plans). But they're in this for the long-haul. OHV was never meant to be a fire sale to be built out and sold in a year or two. There is a multi-year game plan, and TIC can afford to sit and release homesites to developers as market conditions warrant.
Agree.NYT said:OHV was never meant to be a fire sale to be built out and sold in a year or two. There is a multi-year game plan, and TIC can afford to sit and release homesites to developers as market conditions warrant.
Standard deal sub-developers get from TIC is
6% = Max allowed profit margin
70-75% = upside portion that goes to TIC when sub-developer margin exceeds 6%.
Typically, the phase 1-2 base prices you see are set to hit that 6% profit margin. Upside comes from price increases, but mostly accrues to TIC.
In determining margin target for the sub-developer, the following assumptions/allowances are typical
~8-9% for overhead expenses
~$100psf cost for construction
Land cost is huge. When you back into the numbers for TayMo Capella, you get to about $200psf for the lot. Similar for most of Groves.
Lots at CV and SG would prob be in the $160-180psf range if they were being built by sub-developers.
I believe 5P deals with their sub-developers in Irvine are very similar in nature, but just left a little more room for upside in PP.
Just indirect info
i1 said:Agree.NYT said:OHV was never meant to be a fire sale to be built out and sold in a year or two. There is a multi-year game plan, and TIC can afford to sit and release homesites to developers as market conditions warrant.
Standard deal sub-developers get from TIC is
6% = Max allowed profit margin
70-75% = upside portion that goes to TIC when sub-developer margin exceeds 6%.
Typically, the phase 1-2 base prices you see are set to hit that 6% profit margin. Upside comes from price increases, but mostly accrues to TIC.
In determining margin target for the sub-developer, the following assumptions/allowances are typical
~8-9% for overhead expenses
~$100psf cost for construction
Land cost is huge. When you back into the numbers for TayMo Capella, you get to about $200psf for the lot. Similar for most of Groves.
Lots at CV and SG would prob be in the $160-180psf range if they were being built by sub-developers.
I believe 5P deals with their sub-developers in Irvine are very similar in nature, but just left a little more room for upside in PP.
Just indirect info
Really good info! Thanks ob1!