Town-home Developers FEEDBACK WANTED

[Karam Khalil]

Hello all,

We have a site that is 5.5 acres and working to do a town-home development. For those who have experience in this type of development, how do you advise running a feasibility study on this type of project? How can we estimate potential returns, costs and expectations? We are in between building single family homes or town-homes. Of course, town homes means more density but we want to make sure more density converts to higher returns.

All tips are wanted. Also, pros / cons of a town-home development is appreciated.

Thanks in advance! 

[Rishi Dalal]

I have not done a townhome development but I am looking to get into townhome development and we identified a few things from the few parcels of land that we have analyzed:

1. Not all areas are suited for townhome development.  For example, even in the hot growth market of the Dallas area unless there is dense development, townhomes are not suited for that area.  

If you are unsure if the area is suited for townhome development hire a consultant to do a market study.

Also, do a search in the area to see if there are other townhomes for sale.

Another way to do it is to talk to a few GCs who are doing development in that area.

2. We found a piece of land that was similar size to yours in an area that was ripe for townhome development but was rectangular in shape.

After talking to a consultant we found that the land was not wide enough to accommodate townhomes on both sides of the rectangular land as we had to account for roads and sidewalks in between the homes and those had to be a specific size based on city rules.

The seller believed that we could fit about 90 townhomes on the almost 6-acre parcel, however, we could fit only 45 to 50 townhomes as the land was not wide enough.