Architect-Contractor-Owner building near Breckenridg /First deal

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Architect-Contractor-Owner building near Breckenridg /First deal

Kyle Donath
Member since 2020 · 7 posts · 3 votes

Good afternoon Yall,

I am a soon to be licensed architect preparing to purchase a lot a half hour drive from Breckenridge, Colorado in a thickly wooded, slightly sloping subdivision that sprawls up the mountainside with plans to build a small, modern and well designed SFR.

Some background on the area: Breckenridge was the most visited ski resort in the US this year, and constantly growing in popularity. Up the valley to the north is a heavily developed couple of mountain towns that serve the many resort towns of Summit County, leaving down the valley over a well plowed mountain pass to the south to be the only option for future development. The specific area I am looking toward is the Valley of the Sun Subdivision of Fairplay, Colorado, where lots are selling from $20k - $60k depending on how far up the mountain side they are. Higher up = less maintained roads in the winter, and this is a ski house, so access during storms is key. 


My plan is as follows:

-Purchase a lot of ~1 acre for $30k-$35k in cash.

-Building permit can be acquired for only permit fees, structural engineering, soils testing and surveying fees. I will provide all architectural services. Approx. $8k.

-Construction of new 1,000SF home - 2 bed 2 bath I will be the GC (will receive license for FHA loan), and my friends, father and I will be performing all of the framing, windows, flashing, most MEP, insulation, dry walling, painting, finishing. Subcontracted will foundations and limited MEP work. Estimated costs at $100/sf will be $100k funded via FHA loan.

-Comps in the area are selling at around 250K for cookie-cutter 1990s mountain lodge style homes that need updating. I am confident that the mountain-modern style I seek to design to will stand out from the competition in a positive way. 

-Total costs ~150K for a home I can conservatively sell for $250k and roll into the next property in the area, the following year. 

So, seasoned developers, what am I forgetting and what am I getting right? My current time to buy land is May - when snow is gone, and building could start soon after. Thank you in advance! I'll be active here to keep answering questions to clarify everything I haven't touched upon!

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Nik Moushon
Architect · Wenatchee, WA · Member since 2018 · 843 posts · 907 votes
6y

Unless you have quotes for your soft cost services, $8k seems really low. I dont know your area but I would guess your survey and soils test are got to cost close to $5-6k. Struct is going to be another $2k easily. Permits will probably be in the $3-5k range. Also, if you are a licensed arch (or even if you are not) then you dont need a Struct Eng for your SFH. You can do your own calcs for a SFH. Thats easy math. Plus if you over size them a bit and dont do huge spans then the city usually doesnt ask for calcs anyways. Its when they start seeing large spans and beams that look a bit to close for comfort is when they start questioning things.

Utilities are a big one you are missing. This is easily another $30k. Where I live, near mountains too, it cost my boss $20k just to drill his well and he is only at 2000 ft elevation. That didnt include the equipment for the well. Septic can be hit or miss and it is very site dependent. Check with the subdivision you are buying this lot from. They should've been required to do a perk test for each lot (depending on how old this sub div is). You could be at an avg cost or instantly and a huge cost bc your lot just happens to have too shallow of top soil and hitting solid rock to quickly and you have to get a completely different septic system thats double the cost. 

You will also need to consider rental costs for any heavy equipment and transportation of hauling to and from site. 

Dont forget your down payment and closing costs on the loan. That can easily end up being $5-10k. 

Most of this stuff you can get a pretty close to firm number on. Just have to do some due diligence. 

Lastly, how are you doing an FHA loan if you are planning on selling this immediately after completion?

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  • Andrea Weule
    Investor · Member since 2020 · 324 posts · 278 votes
    6y

    Two quick thoughts...

    1. Utilities.  Does it have water/sewer/septic, electric, gas, etc to the lot?  Is it easy to get these?  Just know actual land development is a bit tough and can be expensive in rural areas.

    2. $100/sf seems really low to me.  I know in Denver its ranging $200+/sf here.  I'm just thinking that in a rural area with less contractors it could be even higher.  

    Very exciting though!  Way to dive in!

    1Reply
  • Kyle Donath
    OP
    Member since 2020 · 7 posts · 3 votes
    6y

    @adreaweule Thanks for your input! Do you find this too low for 80% self built? My research has been leading me to a rule of thumb that costs to build are about 50% materials 50% labor, and this was based off of the $200/sf figure.

    And you are right, I left utilities out! Electric and telephone at the road. Well and septic on site, and gas via tank if determined that it would be cost efficient. Given the lots are on a mountain, I'd expect wells to run more expensive and septic to be average given how common they are in the area. 

    0Reply
  • Nik Moushon
    Architect · Wenatchee, WA · Member since 2018 · 843 posts · 907 votes
    6y

    Unless you have quotes for your soft cost services, $8k seems really low. I dont know your area but I would guess your survey and soils test are got to cost close to $5-6k. Struct is going to be another $2k easily. Permits will probably be in the $3-5k range. Also, if you are a licensed arch (or even if you are not) then you dont need a Struct Eng for your SFH. You can do your own calcs for a SFH. Thats easy math. Plus if you over size them a bit and dont do huge spans then the city usually doesnt ask for calcs anyways. Its when they start seeing large spans and beams that look a bit to close for comfort is when they start questioning things.

    Utilities are a big one you are missing. This is easily another $30k. Where I live, near mountains too, it cost my boss $20k just to drill his well and he is only at 2000 ft elevation. That didnt include the equipment for the well. Septic can be hit or miss and it is very site dependent. Check with the subdivision you are buying this lot from. They should've been required to do a perk test for each lot (depending on how old this sub div is). You could be at an avg cost or instantly and a huge cost bc your lot just happens to have too shallow of top soil and hitting solid rock to quickly and you have to get a completely different septic system thats double the cost. 

    You will also need to consider rental costs for any heavy equipment and transportation of hauling to and from site. 

    Dont forget your down payment and closing costs on the loan. That can easily end up being $5-10k. 

    Most of this stuff you can get a pretty close to firm number on. Just have to do some due diligence. 

    Lastly, how are you doing an FHA loan if you are planning on selling this immediately after completion?

    3Reply
  • JH Bridge
    Surveyor · Denver, CO · Member since 2013 · 33 posts · 15 votes
    6y

    @Kyle Donath,

    I think @Nik Moushon is right about the $8k for permits, engineering, soils & survey being too low. By a significant amount. A surveyor coming from Denver will have travel time & probably multiple days of it. You might be able to find a survey company from Vail or Dillon, but I don't know what their travel time is or how busy they are in the spring. Something to think about. Also, it looks like Park county's online system doesn't need to be as robust as some larger, more populated counties. That is time to & from the county seat in Fairplay. And time spent talking to them, etc...If you're up there building anyway, it may not be too much of an issue. Again, just something to think about when building in margin.

    A few things to budget for:

    1. I think a big component that you can & need to nail down is cost of constructing on a site with plenty of granite. It invariably increases the cost & time of construction.  I've heard of most mountain drilling being no less that $15k.
    2. Remember that you're more than likely going to have to level out granite for both the house & the septic. With you designing though, you might be able to control these costs a little more.
    3. Call South Park Telephone & IREA to see what it's going to cost to bring in the services. It'd be a good idea to have your house site roughly decided, as distance plays a role.
    4. Heavy equipment rental will be a significant chunk of money. I imagine you'd have to rent it from down here in Denver. So budget travel to & from (I'd guess a day for each). And of course, whatever time on site you're going to need it. You'll have different types throughout the build. Excavator, Skid Steer (bobcat), Crane, etc...
    5. Something I think that gets forgotten about, especially with larger mountain lots, is the driveway. Again, with you designing, it'll help. But you're going to have to lay asphalt or gravel from the maintained road up to your house.
    6. I know foundation is included in the $200/sf estimate, but that's for Denver. Expect some increase in the bids that come in from you concrete sub, as they'll have to travel a decent distance to get to your site every day. I'd also call to see what the cost of a concrete truck delivery is for up there. For multiple pours.

    I do not want to come across as though I'm trying to dissuade you. Quite the opposite. I see projects like this getting done up there & know it can be done, especially with you GC-ing & designing it. That will give you more margin than most. In fact, after all the time, effort & money you'll have into it, I'd bet on you having a hard time letting it go.

    2Reply
  • Bill S.Pro Member
    Moderator
    Rental Property Investor · Denver, CO · Member since 2013 · 4k+ posts · 2k+ votes
    6y

    @Kyle Donath I echo the comments about site costs/issues.

    In addition, your money source raised a cautionary flag for me. Have you fully vetted that source of funds? There are programs out there that no one uses because they are too much headache and there are better products from other sources. Knowing Federal programs, I would be very surprised if you could GC your own property even with a license. Also, it wasn't clear what your exit plan is aside from having value. Most loan programs are for owner occupants that will reside in the property for at least a year.

    0Reply
  • Kyle Donath
    OP
    Member since 2020 · 7 posts · 3 votes
    6y

    Lots of great points here, I'll address them by response: 

    @nik moushon my research shows me a hand full of both surveying and geotech companies in the town of fairplay, as well as nearby in summit county, so I'm hoping travel costs will be kept to a minimum and stay around 3k total. Structural engineering could be done prescriptively, however with the high wind and slow loads and mountainous siting, I am leaning toward using an engineer I've worked with on many projects before for a reduced rate, say 2k. Plus permits and review fees, 8-10k seems within the realm of reality. 

    Heavy equipment should be limited to a skidsteer for grading and excavator for footings. Doing quick research from local companies, both have rental rates around 1k per week. I'm sure I could tow these smaller machines on my own, but we'll say 4k total.

    With these, I'll be able to perform all grading, and excavations, and cut the driveway. Add estimated 2k for materials. 

    Water and septic will be a doozy, but at least there's a government resource for looking up neighboring well depths which are averaging 225ft. The drilling company I spoke with puts costs at around 20k including installed pump and tank. This leaves septic which I have limited info on thus far. For now I'll assume 10k although I will be performing the work myself.

    @Bill S. Frankly, I haven't dug very heavily into finding financing yet, as building won't begin until early summer of next year. I'd have 20-30% down at that time so my limited research makes me think I'll do ok here. Calculators have me estimating about 5k.

    @JH Bridge a lot of good advice on planning for being a good distance from Denver. Concrete will certainly be an upcharge from Denver, however there are several companies local to the project area that I would contact first to keep that down. It's hard enough to get concrete scheduled in Denver as it is! Their availability is going to be key in getting this project dried in within the 6 month build season of the area.

    This updates rough numbers to:

    -35k land

    -100k loan + 5k fees

    -10k permits engineering survey soils

    -30k well + spetic

    -electrical and phone hookup placeholder of 10k

    -6k for heavy machinery and gravel drive

    This rounds out to 196k total costs. My only comps in the area of this squarefootage are older homes selling for $250k, so this will be something I need to go over with a realator to see how far above this I'll be able to get. With estimated 15k in closing costs, I'm not very into 40k profit for this much work and risk. If I could clear closer to 300k, it could be game on. 

    My next steps are more research and quotes for specific lots to aid in clarifying costs.

    0Reply
  • Marcello Di Gerlando
    Investor · Colorado Springs, CO · Member since 2011 · 322 posts · 238 votes
    6y

    @Kyle Donath

    Very excited for you! We opened our STR in Placer Valley a few miles from Valley of the Sun just this winter. Demand has been way above our exceptions. So much so that we are considering acquiring another property and looking at what it would take for a new build. Would be happy to exchange notes. I posted a link to my STR below. check it out. PM me if you want to chat.

    0Reply
  • Marcello Di Gerlando
    Investor · Colorado Springs, CO · Member since 2011 · 322 posts · 238 votes
    6y

    BP booted my link to Airbnb! 

    0Reply
  • Emilio Ramirez
    Contractor · Denver, CO · Member since 2009 · 399 posts · 166 votes
    6y

    Kyle. Great idea but be very careful with the numbers. It's fine to get a rough idea by using square foot guesstimates but before you make an offer I would suggest drawing the project as complete as possible and then quantifying everything so you can put a unit cost to it or send the drawings out to bid for the scopes you need help with. Good luck!

    0Reply
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