HELP! I know ZERO about new construction - If you have a piece of land suitable for 10 townhomes...

[Wendell De Guzman]

I have not done new construction so I need the help of developers out there.

I have this piece of land suitable for development of 10 townhomes. Each townhome in this nice suburb of Chicago can be sold for $650K or even more. I can get the land for $1.1M. I don't know...

1) the cost of developing the land
There is an old house that sits on one part of the land so I assume it has utilities/sewer lines

2) the cost of the building - for high end townhomes, should I use $100/square feet or is that too low

3) what will be a typical ROI that you will say "Yes, this project is worth it." If I assume $120/sqft as total cost of developing the land and the building, I have a 37% ROI. Is that good enough to take on this risk?

4) what other things should I consider?

Here's a schematic of the site plan:

[Wendell De Guzman]

Originally posted by @Jay Hinrichs:

@Wendell De Guzman 

  Just simple math Wendell based on your numbers.

your in the dirt 110  each

you say you can build for 100 a foot

so 4k sq ft that would be 400k plus 100k for the lot plus carry cost ut oh cost real estate fees tax and insurance your probably looking at Hi to mid 500's investment so 50 to 75k profit per maybe a little more.. NOt bad but can be risky at that price range if your stuck with them

If its 3k sq feet take 100k off your all in and your at 150 to 175k per and that is a smoking deal I would do any day of the week.. especially if you can get bank financing for your vertical with say 20% down.

 Thanks Jay. Makes sense! I think I have a smoking deal here. I need to partner up with a developer then...