Great questions, @Michelle Flores
There are a couple of factors, so I'll give you a long answer instead of a simple one.
First things first, when we talk about condos in Austin, it's not really a type of home but the legal structure that we're placing over the property that defines common elements and limited common elements on a lot, enabling us to sell 2 houses on the same lot separately. This is probably the same elsewhere but we have a bit of a unique situation in that the city has no involvement in the condo process.
So when we're talking about making condos on a single family lot (SF-3 zoning in Austin), we're really talking about building more than one dwelling unit (i.e. house) and selling them separately. On SF-3 we're limited to 2 dwelling units per lot.
There are two main ways that we get 2 dwelling units on a lot - a duplex or a house with an Accessory Unit (garage apartment, granny flat, etc). There are different requirements for building each one.
For a duplex, i.e. there is a shared wall, the lot has to be at least 7000 square feet and have at least 50 ft. of frontage. There are other rules and odd shaped lots have some rules that make it possible to build them in some cases, but those are the two main rules.
For a house and an ADU, the lot has to be at least 5750 square feet, the ADU has to be in the back, and the ADU can either be no larger than 1100 sq. ft. or 15% of the lot size, whichever is smaller.
It's worth noting that a house and ADU will likely sell better than a duplex. They're typically more desirable. Also, you have to check deed restrictions and neighborhood plans. Either of those can prevent you from building what you want to build.
Now to your specific questions:
What is the min size lot you would consider developing as condos vs duplex?
I consider anything that legally qualifies. The minimum is really less important than the maximum in most Austin neighborhoods because we have a lot of folks that are buying that want small spaces for various reasons - single folks, couples without kids, it allows people to buy in neighborhoods that they can't afford to build something bigger, small house living, etc.
The bigger question is how large would I buy and that's driven by the numbers. For example, let's say that there is a 13000 sq. ft lot in a neighborhood for sale.
- The initial thought is that you can maximize the sales price by building as big as possible, which is 5200 sq. ft (City of Austin 40% FAR rule).
- You could do one of three things with this number, build a big house, build a duplex (likely two 2600 sq. ft units), build a house with an ADU.
You'd then overlay house sales number on this and this is where it can get a little trickier. While on paper you probably want to build the full 5200 sq. ft allowable, the specific neighborhood might not dictate it. If you can sell at $300 per sq. ft. but new duplexes in the neighborhood don't ever go over $600k, than you can't run your numbers assuming a 2600 sq. ft unit will sell at $780k. In this case you might want to build smaller units.
Does the lot cost matter much or is it strictly based on lot size?
Lot cost is more related to what you can build and sell than lot size. It all goes back to the numbers. Figure out what you can sell for, what it's going to cost you to build, than back into the numbers. From here you can figure out if the cost of the land/tear-down works. Sometimes on BP you'll see people with a percentage rule, "Your lot should be X% of your cost." This doesn't work in Austin, the land costs too much and is usually more valuable then the house.
Hope that helps, let me know if I need to explain something better. With the length of this answer, maybe I should do a video specifically addressing these questions!
