Information about starting a townhome development

[William Fuller]

Hi 

I'm interested in investing in land to start a townhome development and have some questions. How many units are generally in a townhome development? How much land is needed? What should I look for in terms of land? Any information about land in reference to developing townhomes would be helpful Thanks

[Evan Polaski]

@William Fuller, these are all good questions for your local building department.  At a high level it will all come down to the specific piece of land you are looking at.  Different pockets will be zoned for different density.  

From there, you will sewer tie-ins, so you need to make sure infrastructure under street can handle the density you want to put in.  If you need to rezone for your density, you could have issues with local schools not having seats for that many new families.  Topography could be an issue.  

I have a builder friend who tore down two houses and put up 3 townhomes on those two lots.  He also put up 2 townhomes on a single lot and four townhomes on a single lot.  My sister used to live in a gated townhome community in Midtown, in Atlanta, and I would guess there were likely 150 townhomes in that community.  The point being: it can be just about any size you want.  It all comes down to how many can you realistically fit.  What is your basis in the project?  What is your anticipated sale price? Is there enough demand in the market for that large of a project? Are there infrastructure limitations, i.e. main sewer can't support 100 new townhomes feeding into it?  Is your level of density already zoned, or would you need to rezone and possibly get declined?

And then, how much money do you have?  My builder friend can build a fairly generic townhome for about $250k/door.  His higher end ones cost him about $500k/door.  If I hired a builder, who would typically markup project about 20%, my costs would be $300k/door to $600k/door.  

The only certain thing I can say to answer this: the hillier the lot, the hard it is to build.  Flatter tends to be better, but even then you need to make sure the soil is stable to support your structures.  Piering a foundation can be very costly, if you have unstable soil.