Post by
Malpeque2 on Jun 24, 2022 11:32am
Highland Gate JV Accounting
The cost basis in the land at the former golf club has got to me near ZERO, after the out parcel sales over the years.
If you come back decades later and build some homes, in either a JV or a consolidate majority owned entity, the gross margin on the sales of these homes has got to be pretty good, heh? Because the land is carried at near zero from the old cost basis. Your only costs really are for the structures.
So if this land is worth lets say $1M an acre undeveloped in today's money..........we should be looking at better gross margins on the sales of these homes than we have seen so far in 2021 and 1st Q of 2022.
What do you think is going on? These reported numbers look pretty far off!!
Comment by
undervalue on Jun 24, 2022 12:05pm
I think that this points out that to make money building, you need to enter and exit quickly. Hanging around on a site kills margins. That said, we have zero management skills in this area, and they should be avoiding this strategy in the future. Zone and go. Leave the building to the pros. I also agree the reporting is completely insufficient to understand how it is working out.