Buying 2 out of 3 villas in block

The opportunity has come up to purchase the rear villa in a block of three where we purchased the middle villa two years ago. The vendor has come to us with a price I think is below market value (as he would be saving on costs associated with selling through an agency) and fair.

I was wondering what people's thoughts were with the idea of doing as such, it scares me a little as it goes against diversifying, but leaves the option down the track for buying out villa one and owning the whole block.

What are things I should take into consideration?

(for those interested, the properties are at Umina Beach, NSW the block itself 150 metres away from the beach but no views)
What are the advantages in owning the block?
What are the prospects for development or highest usage of the site?
Don't know the area but....

Do you believe there is good growth potential?

Is the rental demand strong?

What is the current title of the property, would having majority ownership of the lots give you a benefit come decision time?

What other property do you current hold?

Do you plan to continue to purchase?

Diversification is good, but you also don't fix something thats not broke.
What do you believe the benefit of owning the entire group is?

And do you believe this outweighs the centralisation risk, and foregoing purchasing another property else where which may have superior returns?
Unless you're very close to the shops, the entire area there has a maximum floor space area ratio of 0.7, so you wouldn't be able to do too much with the block if you owned it.
How much are they asking for?

I've got a 800m2 block on Ocean Beach Road and eventually I want to put three townhouses on that.
It is located south of West Street.

The total block size is 830sqm. There's been great growth there over the last 24 months and I believe there's still room for more.

He is willing to let it go for $415k which is pretty good looking at comparable sales for 3/1/1 at that end of the suburb IMHO.

But then I also wonder, as mentioned above, whether I'd be better off investing it elsewhere in a non-strata property with development potential and in a different area so if the market falls I'm not in such a pickle.