Real estate business has been attracting a lot of investors over the years. This is due to the rising demand for affordable and decent houses by people. Investors are taking loans to build houses and renting or selling these houses to the willing customers to pay back the loan and start pocketing profits. Some of these investors are new to real estate business and they have difficulties in determining the condo price. Some overvalue or undervalue their houses. When you overvalue a product you’re chasing away potential customers and when you undervalue you are actually going to count losses despite the great demand for your products. Here are some of the key things you must put into consideration when determining the new launch price:
1. Land cost
You will need land where your house will stand. The land cost varies from place to place. You will spend a lot of money to acquire land. The money spent on acquiring the land should be recovered when you have your property in place. Your new condo price should recover all the funds spent on acquiring the land the property has been built in.
2. Construction cost
To construct your house you need a contractor, architect, casual laborers, and other workers. All of them are subject to a salary. For them to do a good job you need to pay them well. You will also need construction materials such as cement, sand, building blocks, roofs, doors, windows and many more. All the cost you incur in the construction process should be compensated by the new launch price. The construction cost should be incorporated when determining your condo launch price.
3. Expenses Administrative costs
As an investor, you may not have all the skills needed in the development of your project, you end up hiring managers, maintenance staff and advertisers. Some staffs will require you to hire an office for them. All staffs need to be paid well for your project to be successive. All the project administrative costs should be considered when determining the launch price.
You might have financed the development of your project with a loan from banks. Loans attract interest that s to be paid alongside with the loan amount. In estimating the new launch price make sure to incorporate all finance costs incurred. The condo price must be able to compensate the loan, interest and all your funds used in developing the house and still give you a profit.
Marketing and sales cost
After you have completed constructing your houses you must advertise them to start making sales. All expenses incurred when promoting your house should be considered when determining the condo price.
4. Competitor’s price
You’re not alone in the real estate business. Know your competitors’ launch price, your price should be slightly lower or higher than that of your competitors’. Conduct a survey to know the price potential customers are comfortable with.
The launch price does not necessarily have to be cheap or expensive. It is a construction budget and not a property valuation. Don’t make a decision solely based on the price it is also wise to track the records of the developer, architect, and the contractor building your condo.