Minimum Bottom Line Profit Should Average 9.4%!
For Trades & Subcontractors, at Least 11%
After Income Taxes Are Paid!
The residential construction industry’s average net profit after taxes equals 9.4% during 2019. The top four companies in the United States built and sold 151,366 homes during 2019 with an average sales price of $376,703. Each home netted after income taxes $35,464 of profit. This equates to an average net profit of 9.4% in the residential construction industry.
This research ties to the following summary schedule from the publicly availabe financial statements and annual reports:
Name of Company 2019 Closings 2019 Sales 2019 Net Profit 2019 Average Net Profit
D.R. Horton 56,975 $17.593B $1.618B 9.09%
Lennar Corp 51,491 $22.26B $1.85B 8.31%
Pulte Group 23,232 $9.916B $1.02B 10.25%
NVR 19,668 $7.245B $880M 12.11%
This website has many articles within the Construction Industry standards section explaining the respective margins, mark-ups and expected net profits for the various residential contractors including new home, remodeling, restoration and trades. This site includes information pertaining to:
- Estimating – proper methods, procedures and tricks;
- Mark-up and Margin – learn and understand the difference and the best formula for your company;
- Policies – policies that work and how to implement the corresponding procedures;
- Accounting – provides best accounting systems and addresses methods used in the construction industry;
- Job Costing – information about different tools and systems to record job costing;
- Evaluation – learn how to evaluate results and implement lessons learned.
If you want additonal information, go to the construction industry section of this website and read the material that best aligns with your information request. Act on Knowledge.
Do you want to learn how to get returns like this?
Then learn about Value Investing. Value investing in the simplest of terms means to buy low and sell high. Value investing is defined as a systematic process of buying high quality stock at an undervalued market price quantified by intrinsic value and justified via financial analysis; then selling the stock in a timely manner upon market price recovery.
There are four key principles used with value investing. Each is required. They are:
- Risk Reduction – Buy only high quality stocks;
- Intrinsic Value – The underlying assets and operations are of good quality and performance;
- Financial Analysis – Use core financial information, business ratios and key performance indicators to create a high level of confidence that recovery is just a matter of time;
- Patience – Allow time to work for the investor.
If you are interested in learning more, go to the Membership Program page under Value Investing section in the header above.
Join the value investing club and learn about value investing and how you can easily acquire similar results with your investment fund. Upon joining, you’ll receive the book Value Investing with Business Ratios, a reference guide used with all the decision models you build. Each member goes through three distinct phases:
- Education – Introduction to value investing along with terminology used are explained. Key principles of value investing are covered via a series of lessons and tutorials.
- Development – Members are taught how pools of investments are developed by first learning about financial metrics and how to read financial statements. The member then uses existing models to grasp the core understanding of developing buy/sell triggers for high quality stocks.
- Sophistication – Most members reach this phase of understanding after about six months. Many members create their own pools of investments and share with others their knowledge. Members are introduced to more sophisticated types of investments and how to use them to reduce risk and improve, via leverage, overall returns for their value investment pools.
Each week, you receive an e-mail with a full update on the pools. Follow along as the Investment Fund grows. Start investing with confidence from what you learn. Create your own fund and over time, accumulate wealth. Joining entitles you to the following:
- Lessons about value investing and the principles involved;
- Free webinars from the author following up the lessons;
- Charts, graphs, tutorials, templates and resources to use when you create your own pool;
- Access to existing pools and their respective data models along with buy/sell triggers;
- Follow along with the investment fund and its weekly updates;
- White papers addressing financial principles and proper interpretation methods; AND
- Some simple good advice.