Thought I would get a few people's opinions on pro's and cons of...

Thought I would get a few people's opinions on pro's and cons of property developments - I know there are plenty out there at the moment who think property is overvalued, but just read through the following and let me know your thoughts.

I have a property that is 4000m2 on the outskirts of town that has DA for 14 - 2 bedroom units - 120m2 each in size. There are currently 3 - 2 bedroom units that I have renovated and producing $220 per week income that will remain on the front of the site. I am thinking of putting them on the market, although was thinking of maybe developing the block in 2 stages. There is currently no debt against the property.

My way of thinking (and I have to get quotes from builders, so these are ballpark figures) is to build 9 initially on the west side. At $1,000m2 for consrtuction, I was budgetting on around $135k each to build, which includes headworks etc of around $10k per dwelling plus $5k each for driveways, gardens etc. In the current market, they would rent for $240 per week (being brand new as opposed to the 40 year old current ones, although refurbished), and should sell conservatively for $220k each (being near a uni helps).

So total outlay for final construction of 14 would be $1.89 million, with a potential sale value of $3.08 million. I am under no illusions that the property market is definitely softening, although even a drop of 25% would see the value fall to $2.31 million.

I have tried to sell the block as a whole, although developers just aren't buying at the moment as the big returns just aren't there. As I am in the position that I own the property it makes it a little easier to do the figures.

p.s. I expect a barrage of replies saying I am off my head, but I am after others experience in developing - whether you have been burnt or not, things you would have done differently etc.

Cheers