Hi everyone, we are analyzing the development and townhome construction on a 2 acres piece of land in the greater Atlanta area. Utilities are available in the road in front of land.
Questions I have (and I am in the process of consulting a couple of engineering and development companies):
- What is the average cost to develop a land for townhomes? This land is zoned for 8 THs per acre so estimate to have no more than 12-16 units.
- will we have to subdivide the land during development? What are the estimated costs in Atlanta for that?
- Where can I get references for good small developers in the area?
Thanks once advance!
Hi @Sara Als. ,
Congrats on your project! It's really hard to answer the cost aspect because every region of the country is different and it varies by finishes and required material by the city. I invest in Atlanta w/ a partner so I have some very rough basic knowledge of it. I would guess somewhere btwn $120-150/sf but take that with a lot of salt. Soft cost like architect, permits etc I would maybe budget another $20/sf.
I would start w/ the architects, talk to three or more, get an idea on the soft costs, and ask them for referrals for developers or construction companies. Again 3-4 is ideal so you have a good set of data point.
As to subdivide or not, that's up to you or what the market dictates. There are some townhomes essentially they're condos w/ HOAs so the owners own air rights and exclusive use etc. Some are fee simple townhomes. I would take a look on what's selling around your area and model after that.
Feel free to DM me if there's any questions you think I can help answer.
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Thanks @Jason Hsiao . For the townhomes and area we are in, I believe $120/sf for construction is too much. I hopefully want to be around $85-$95/sq.
I did some more research and I now understand that i do not necessarily have to subdivided which is good but as you suggested, i will study the market area and determine based on that. I have a meeting with the City deparments tomorrow where i am hoping to get additional information and hopefully some references. Very excited about this project.
Thanks @Robert Mitchell . I have noted your contact info and i will contact you soon.
What are of the City would the townhomes be located? Your product type and subsequent psf will depend on comps within the area.
@Chase Beasley the project will be in Marietta!
@Sara Als. let me know if you need any type of investor partner in this project. We have new construction and flip experience. I live in Cobb County.
Hi @Sara Als.
I am currently building 5 townhomes on Memorial Drive so my response below is based on my experience. Hopefully, it provides you the guidance you are looking for:
1. The average cost to develop is between $110-$120/sqft. My current average is about $110/sqft
2. You don't need to subdivide the land during development. You can phase out development. I paid close to 60K-70K for architecture drawings, civil, mechanical, permit, surveys etc.
3. Last question - I interviewed several developers some seemed promising but ended being fraudsters, slackers, non responsive etc. so decided to get all sub-contractors and finish the job.
Overall I have a lot of lessons learned and would be hard to share on the post. Feel free to PM me and you are most welcome to check out my project and share notes. Getting the development cost close to $85-$95 is going to be challenging in this market. You will quickly find there is shortage of trade and this has driven the prices up. I have included some pictures of my project.
@Terry Burger we would consider. Thanks for offering. I shall get back to you to discuss details!
@Aziz k. Must feel good and exciting to see the building near completion. Congratulations!
And thank you for the details. Defenately helpful. I would love to have a quick chat. I will get in touch after the spring break.
@Sata Als. Your idea is what brought me to this site. I've got the same idea, but here in Houston. Might I ask you how you are financing this project - cash, land /construction loans, private money?
Hi @Wes Eaves we are buying the land cash and planning to finance or partner for the development and construction.. big investment for first timers!
@Sara Als. Thanks and good luck!
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