Small townhouses vs luxury townhouse?

Thinking of building townhouses in a very prime spot (think laneway off Drummond St in Melbourne or laneway off Crown St Surrey Hills Sydney type of location). I have an empty piece of backyard that I can subdivide out.

Is it better to build 2-3 four level 70sqm townhouses that would probably sell for $1.2-1.4m each, or a very big townhouse that would be worth $2.5-3.5m?

Not really to sell. Thinking of holding it either keep it vacant for private use or rent it out.
 
Building crapper and more would have higher IRR if you sold at conservative prices in both cases and sold immediately.

But a luxury townhouse could fetch the sky in a hot market, because they are scarce and there're not many 200sqm plus land size townhouses a few hundred meters from CBD.

Also a question of if I was holding, would I want crappy townhouses which they might build more of (albeit not as much as apartments) or a big one and might not build more of.
 
for the 4L T/H, would that be like garage on ground flr, living 2nd, bed 1 3rd, master on 4th? I am on 2 flr T/H, and I hate the stairs.

am i correct to assume there is about 300m2 land for the build?

yield and demand would be better for the 2-3 x 70m2, rather 1 x 200m2 for areas like Surry Hills
 
Not really to sell. Thinking of holding it either keep it vacant for private use or rent it out.
If you are considering holding to rent out, what is in demand in the area, particularly, what demands a price premium because there is demand that is unmet? If there are many smaller townhouses on the market for rent and a lot of competition to get renters, they might be less attractive. If there are very few nice, larger townhouses, which command a price premium because they are rare, that option might be more attractive. Also, managing 2-3 lots of tenants vs 1 lot of tenants is a consideration. It depends on the cost of the build vs rental return.
 
for the 4L T/H, would that be like garage on ground flr, living 2nd, bed 1 3rd, master on 4th? I am on 2 flr T/H, and I hate the stairs.

am i correct to assume there is about 300m2 land for the build?

yield and demand would be better for the 2-3 x 70m2, rather 1 x 200m2 for areas like Surry Hills

Yea something like that. Around 250sqm. No setbacks required, except in so far as shadowing of my front houses becomes an issue.
 
If you are considering holding to rent out, what is in demand in the area, particularly, what demands a price premium because there is demand that is unmet? If there are many smaller townhouses on the market for rent and a lot of competition to get renters, they might be less attractive. If there are very few nice, larger townhouses, which command a price premium because they are rare, that option might be more attractive. Also, managing 2-3 lots of tenants vs 1 lot of tenants is a consideration. It depends on the cost of the build vs rental return.

Smaller townhouses would probably rent better, as it's at that $1000-1200 sort of price range that more professional families can afford.

A mega townhouse would really be a trophy inner city house I'd use myself to be honest, and hope it could fetch a lot of money in a very hot market. I'd deck it out with top quality stuff which would cost me a fortune to build I'm guessing.
 
Smaller townhouses would probably rent better, as it's at that $1000-1200 sort of price range that more professional families can afford.
You could be practical and do this.

A mega townhouse would really be a trophy inner city house I'd use myself to be honest, and hope it could fetch a lot of money in a very hot market. I'd deck it out with top quality stuff which would cost me a fortune to build I'm guessing.
Or live the dream! :D

Which would you rather do? ;)
 
If it's PPOR then I'd go mega city mansion if it's time for your reward. I wouldn't go high high for an IP as the market is just that much smaller and when money is tight,high end properties suffer the most.

If it's not time for your reward then I'd do the smaller 2-3 townhouses and reap the rewards of compounding growth x 2-3

If you just did 2 instead of squeezing in a 3rd could you go half way and hit high 1s?
 
A friend of mine bought land in Carlton, very close to the City, and had a mega townhouse built on it 4 years ago. The land was an old Taxi Depot that was subdivided.

It has risen in value astronomically. He is not interested in selling it until they both retire but it will set them up very nicely if they decide to move out of town for retirement.

So I would go mega townhouse.

Chris
 
Thinking of building townhouses in a very prime spot (think laneway off Drummond St in Melbourne or laneway off Crown St Surrey Hills Sydney type of location). I have an empty piece of backyard that I can subdivide out.

Is it better to build 2-3 four level 70sqm townhouses that would probably sell for $1.2-1.4m each, or a very big townhouse that would be worth $2.5-3.5m?

Not really to sell. Thinking of holding it either keep it vacant for private use or rent it out.


Google 1 York Place Carlton. My team sold that 2 years ago for close to 2.6m. Word of advice, if you are going more than 2 levels you need to instal a lift to broaden your market.

We've also sold a number off-market properties in Carlton and Fitz for north of 2.5 - 3m

There is good appetite for both of your suggestions above so go with whatever suits your plan.
 
In your situation if you are looking to hold, would it be better to do 3, so in the future if you did need to sell one to move on another deal or for any other reason, you could release some capital without having to sell out of your whole development \ investment?
 
Thanks - all pretty valid points. I'll probably end up procrastinating and doing nothing again. But yes building 2-3 townhouses is the most practical. Building a luxury mega townouse is probably equally as rewarding (or maybe not), but would be difficult to sell in a tough market given the price tag, and there's no flexibility if I just want to sell some. The plus side is, I can say I own a mega townhouse so close to CBD.

Only problem I forgot to mention is, access will be from a laneway, but I have seen Fitzroy/Carlton mega-townhouses fetch $2m+. My location's probably more prime than those suburbs - literally 400m from CBD.

The last option was to obviously build 4 level of apartments, but as I want to hold, I wouldn't want to be holding apartments of which there is a massive supply of.
 
Thanks - all pretty valid points. I'll probably end up procrastinating and doing nothing again. But yes building 2-3 townhouses is the most practical. Building a luxury mega townouse is probably equally as rewarding (or maybe not), but would be difficult to sell in a tough market given the price tag, and there's no flexibility if I just want to sell some. The plus side is, I can say I own a mega townhouse so close to CBD.

Only problem I forgot to mention is, access will be from a laneway, but I have seen Fitzroy/Carlton mega-townhouses fetch $2m+. My location's probably more prime than those suburbs - literally 400m from CBD.

The last option was to obviously build 4 level of apartments, but as I want to hold, I wouldn't want to be holding apartments of which there is a massive supply of.

I reckon you know exactly what to do with this site, lucky you:D
 
i would do the one luxury townhouse.

Scarcity factor will certainly come into play over time and gives you the option of living there if you choose.

You could always build the mega place now and live it then later on in 30-35 years you could always knock it down and build the high density crap and cash in, best of both worlds
 
the problem is you are trying to achieve 2 conflicting outcomes. Decide what you want then act accordingly.

If you can build high end spec and as an alternative use it as a PPOR then that is a good back up plan. If you don't hand on heart really want to sell, accept it is a lifestyle choice,build it and enjoy.

If you want lower risk,fast turnover churn em and burn em then whack up affordable product and get rid of it. Use the proceeds to buy your dream home somewhere else. dreams come and go every night don't forget.
 
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