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Forums » Real Estate Development » development fees

development fees Subscribe to development fees

5 posts by 2 users

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Emilio R

Architect · Milwaukee, Wisconsin


Forum_avatar_avatar-bwiab

Icon_minipost Jul 20 '09, 10:57 AM

What are typical development fees as a percentage of total development cost? Is there a different structure when the developer has a full or partial ownership position versus being hired by an owner to develop a project?

Edited: 06/26/2010 at 09:03AM


Corey Williams

Developer · Fishers, Indiana


Forum_avatar_avatar-corey1973

Icon_minipost Jul 20 '09, 11:50 AM

Perhaps you should outline an example or the scenario you are looking into. Your question has many different answers and with more detail we should be able to help you out.

Edited: 06/26/2010 at 09:03AM


Emilio R

Architect · Milwaukee, Wisconsin


Forum_avatar_avatar-bwiab

Icon_minipost Jul 21 '09, 04:18 AM

Example one: I am hired by an investor to develop a 50000 sf apartment complex.He owns the land, all contracts are with him and I manage the process.Upon completion of the construction of the project I am done and the property management firm he hired takes over. Assume 5000000 total development costs. This scenario would lead me to believe that I would want to maximize my fee and the owner would want to minimize it. Any idea of a typical range?

I don't know if this is more specific or not. I will post more detail or option two later. Thanks.

Edited: 06/26/2010 at 09:03AM


Corey Williams

Developer · Fishers, Indiana


Forum_avatar_avatar-corey1973

Icon_minipost Jul 23 '09, 10:10 AM

I would see how 4% - 6% works with your numbers and the owners budget. You are absolutely right that the owner will want to minimize his budget (your profit) and you want to maximize it. If you are managing the construction as well I would look at bumping that percentage up a bit. The previous company I worked for had a construction department which kind of served as its own company. Their profit goal on just the construction management was 6% of the construction cost.

Prove your worth to the owner and he should see that you are worth every penny of the deal you work out.

Edited: 06/26/2010 at 09:05AM


Emilio R

Architect · Milwaukee, Wisconsin


Forum_avatar_avatar-bwiab

Icon_minipost Jul 26 '09, 05:22 AM

Wow. That makes a lot more sense. The local housing authority allows up to a 12% developer fee. I could not make the numbers even come close with that. I got as low as 6% and it started to look a little better, but I'm thinking now that I will probably have to drop it down another notch or two. Thanks for the input.

Edited: 06/26/2010 at 09:07AM


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