Warnings - Buying a Property to Demo

6 Replies

I am looking to buy a property in Denver to tear down and build a spec home in its place. I was wondering what are the things I need to watch out for/be aware of besides lot location and size when picking a house to buy and demolish? Things like old trees (for permitting purposes), neighbors with loud dogs (for selling purposes), etc. 

@Walker Hinshaw asbestos. It can be costly to mitigate it. Just sold a property and the cost was $20K since it had 2% asbestos in the drywall mud. If it's in Denver proper make sure that you understand their bulk plain ordinances as well as their lot open space requirements. Understand setbacks as well. Front set backs are something that can get you. Usually you have to "match" the character of the neighborhood. This gets dicey if one of the houses next to your lot is one of those "alley houses" (sits on the back half of the lot). Another thing that I've been told that Denver has been doing recently is taking more alley where they don't think they have enough. Not too sure on the details there but you have to be sure you are flexible and have some room in your budget and know what can come up. 

On top of everything Bill said, there are 1000 things that have to be accounted for.  A good architect will help, to get the maximum out of the lot within your budget and the zoning requirements.  Resale is a bit trickier because while its pretty easy to comp out a 1-2 or even 3 month project, a new build is 9 months out and you will be selling in the winter season next year (Feb, Mar ish).  What will happen in 9 months?  Experienced developers and builders have the funding and backing and experience to weather the market shifts, but do you?  

Have you done any rehabs before?  Do you have a rockstar new construction contractor?  Do you have budget variance in place for the unexpected (asbestos, new sewer all the way to the tap, excavation issues, etc)?

Anson Young, Real Estate Agent in CO (#14161n)
303-475-9999

Hi @Walker Hinshaw ,

I have a thread documenting one of my spec home projects that might help. I start with evaluating the land and follow the entire build. It's not done yet, but there are several videos in there that could be really useful for you.

Some of the info is Austin specific and there is so much to know that the thread can't possibly be a comprehensive "How To," but I've tried to cover off on the important points to help people out.

I'm posting another video later today where I go visit a property that one of my wholesalers flipped over to me. It shows my thought process when taking a first look. I'll post the link when it's uploaded.

Hope that helps.

Most building departments will sit down with you, prior to you purchasing any property, and help you analyze it. Look for "planning", "zoning", and/or "land use" departments. Your first time through, I too would recommend hiring an architect. They can guide you through the process and make the learning curve significantly less painful.

Here's my video where I'm on-site, analyzing a potential buy for an urban-infill project. 

As others have said in this thread, if you haven't done something like this before, don't try to go it alone.  Work with an architect, a builder, another developer or investor, or someone else who knows the ropes.

Just make sure your ducks are in row w/ all city/county entities. Even a qualified GC can miss certain permits, etc. I was put on a 3-month stay (luckily I had this overturned after a hearing) when I found out the abandoned drug house I had slated for demo was listed under the National Historic Register. This was missed by all those involved. Fortunately, the city preservation society deemed it to not be a historical structure (the home was an utter disaster and could not be salvaged). Make sure to sit with zoning officials to make sure everyone is on the same page. In fact, the city forgot to issue a height survey which delayed the project another week. Issues like these are an example of the surprises of red tape...

Asbestos would be my number one issue to look into (as a poster mentioned above). This process is time and cost consuming. This delayed the aforementioned demo for nearly 4 months due to surveys, asbestos lab reports, and specialized removal. Needless to say, I was hoping to have a cleared lot in a 2 month period and one year later it was said and done. 

Oil tanks. I am not sure if Colorado has laws regarding the removal of abandoned under ground heating oil tanks. This is a big problem in my area, where many purchase older home and do not check for this. Oil tank removal and testing is required here; and can be very expensive if dealt with incorrectly. You live and learn on situations like this.

Good luck!

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