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Big money in single family is in land development and it is not unusual to see 30%+ IRRs. Looking at vertical construction, when I used to underwrite builders I would see net profit margins anywhere from 5% (builders that would contract out most of the work) all the way up to high teens (GCed their own work and sold high-margin “custom” upgrades). Land development is analyzed similar to other real estate development projects - IRR, EMx, etc. whereas home building is more akin to manufacturing and you’re looking at inventory, margins, turnaround, etc. Homebuilders that have the expertise to develop their own lots can make money hand over fist.
New home sales have definitely slowed but we’re not seeing huge discounts yet.
If I understand things right a lot of land developers are able to sell all of their lots to homebuilders before ever deploying capital too
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