I have a lot I am evaluating in an emerging part of town near several multi-family and townhome developments. The lot size is 12,250 sq ft with 5 ft minimum front and back setbacks. Price is $40/sq ft which seems expensive, but I am going to run an analysis anyways and see how feasible the project is.
I am trying to determine the best use for the property. I need a good way to determine how many townhomes I can fit on a lot this size. Looking for some direction on the best way to determine this.
Thanks in advance!
I would first look up the zoning and find out the density, all setbacks, height restrictions parking requirements, I would also look into the cost of utility tap fees if you dont have sufficient utilities for your project. See what the value would be for the most that will fit on the lot and function as it should. In general 20% is my threshold for land in relation to gross value of the project. I am sure other may have different thresholds but that is mine. 1 million in gross value =$200k for the dirt max. There are a lot of other considerations but this is where I would start.
Thanks Kenneth. That's helpful information.
I have determined the height restrictions, density, setbacks and working on confirming the utilities. Now, just trying to determine best use. Not sure if townhomes are the way to go, but in order to figure it out, I need to determine how many townhomes I can build on the site. After the setbacks and maximum lot coverage %, I have roughly 11,000 sq ft to work with.
I would talk to the architecture firm that you will use for the blueprints. Depending on the firm you may get some free/cheap advise and/or a preliminary elevation. If you don't know of any local architecture firms then you should ask local builders or contractors for a recommendation.
You're going to want to speak with a local engineering firm who can help you determine the buildable area, the requirements for building and utility constraints, any environmental constraints, etc.
A good architect can help you out a lot here. Your local planning and zoning rules are going to vary a lot from what others on the forum have. Here are other things to consider:
1. Are there easement challenges?
2. Do you have any tree ordinances to adhere to? If so, how do they constrain your footprint?
3. Do you have CC&R challenges? If so, how do they impact the design?
4. Are there special city ordinances that constrain sizes of buildings on certain size lots? In Austin there are McMansion ordinances that drastically limit sizes and you need specialists to challenge exemptions for attics, etc.
5. Are there topography challenges that drive building costs and foundation designs?
6. Is your lot on a corner such that the setbacks vary from "normal" setbacks?
7. Are there neighborhood plans or other special items that you need to live with?
8. Is the property zoned for your intended use? If not, how likely is upzoning or downzoning?
9. Are there utilities to your project that are sized sufficiently for your intended use?
10. Are there floodplain challenges?
11. Are there environmental challenges?
12. How is your buy-side contract structured to design out entitlement risk? Are you planning to purchase the project without permits?
I could go on and on and on. Depending on the answers to the questions above you may want to consider engaging a fee developer too. A civil engineer can run a feasibility study, but architects are generally pretty solid for smaller projects like what I think you're trying to do.
I would agree with everyone that your best bet is to get an architect to evaluate the property. It is pretty common for an architect to do an assessment of a property before the purchase. They will check for zoning, setbacks, FAR etc (well covered above).
I would add however, that the frontage of the property is also very important for townhouses. It is generally easier to fit more town homes (or town homes with more bedrooms) in a property with more frontage to the street as opposed to a narrow but deep property. It all has to do with the amount of windows you can have which is often more important than square footage when it comes down to the design.
Todd, I agree with everyone about consulting an architect. I would also suggest you verify, verify, verify everything for yourself with the city departments that make the decisons about permits and allowing projects to go forward. I would build enough inspection time in your due dilligengence for your contract/option to do this. Building and zoning codes may appear to be straight forward but I have seen wacky interpretations as well. I have had architects on more than one occasion design something that could not be built because of some minor oversite and I had to pay for design revisions. I know it is not fun but I take time and make sure I fully understand the zoning concernig my projects and I ask questions at the zoning board if I am unsure. I have no idea about soil conditions where you are or if the land is virgin or been previously developed. As a part of your due dilligence I would consult and engineer both for any concerns you have anout the soil and to address the plans that your architect may give you. I have all plans from architects engingeered and stamped before I submit them. This makes it a lot less likely that a inspector or plan reviewer will go to war with you over a structural code interpretation when you have an engineer stamped set of plans. It cost a little more to have this done and in most places it is not required because code exist but it has proven to be well worth it for me.
I hope this helps
Thanks everyone. You all have provided excellent advice in this thread.
Everything looks good at this point except for price... With dimensions of 98x125 and an ask price of $490,000 ($40/sqft), it will be difficult to make a profit building townhomes on this site. Townhome comps are a little under $300k for this area. The site is probably not big enough for an apartment complex but, may be good for a small office building since the height restriction is 100 ft. Will need determine what the economics on an office building look like.
Wanted to provide an update.
I have an architect drawing up a layout for 4 townhouses on the property. May try to do five 2-bedroom townhomes instead of a mix of 2 and 3 bedrooms, but it will just depend on the layout. Still, at an ask price of $40/sq ft for the land, I'm not sure the deal will be worth pursuing. It will come down to development costs. Next step will be to determine hard and soft costs and the max I can pay for the property if I want to achieve a 20% return.
Todd have you talked to any contractors that can give you an idea of what it cost to build what you want in your area? If you can get that number you can take your density and back into your land value. Is the land virgin? I would spen a little on soil test to see if you have good compactible dirt. I have not worked in Texas but @Bryan Hancock is someone I would look to for some insight on build and development cost.
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