Durango, CO · Member since 2016 · 92 posts · 12 votes
I'm looking at a property with an existing structure on 1+ acres west of Denver. Sewer/Water/Gas already available, zoned R-2. The land would accommodate subdividing to create 4 lots permitting a duplex on each one or 3 duplexes + one SFR. The corner lot is flat. What is a realistic price per sq ft for new construction in this area -- especially if 3 identical duplexes were built? And how difficult do folks think it would be to find available builders/contractors to work on the project?
Realtor · Denver, CO · Member since 2013 · 2k+ posts · 1k+ votes
9y
By the time you break ground, soft costs included you'd be pushing $200 a sqft. Check out the tap fees especially if you're not in Denver. That might stop you dead in your tracks.
Durango, CO · Member since 2016 · 92 posts · 12 votes
9y
Thanks @J Scott I appreciate your time. Meanwhile, I just downloaded your new BP diary book, as well. I imagine prices in Denver aren't quite the same as GA and given my limited experience I'll lean toward that upper end. I was thinking $150+. Land will be about $85K/duplex (~12,500 sq ft) so at 2200 per both units it's $415K. I know older duplexes can range $400k - $500K in the Denver area, not sure how new construction will fare, especially if I decided to hold the properties as rentals. The location has some highway noise but otherwise is surrounded by shopping, light rail, convenient access to the mountains. Other local SFRs on .25 acres (1950s) sold at $285,000ish 2 years ago, some under 1000 sq ft - probably worth mid 350s now.
Realtor · Denver, CO · Member since 2013 · 2k+ posts · 1k+ votes
9y
By the time you break ground, soft costs included you'd be pushing $200 a sqft. Check out the tap fees especially if you're not in Denver. That might stop you dead in your tracks.
Durango, CO · Member since 2016 · 92 posts · 12 votes
9y
Thanks, @Matt M. I will look into that in the county. But, ouch... yes, just read a blog talking about Denver tap fees for sewer and water (post was from 2012) and a 1/2 acre lot with a SFR going for about $30K in tap fees. Where I am from in the east those fees would be waaaay less. I wonder if a lot that already has water/sewer running to a structure would require fees for each subdivided lot. In other words, one lot subdivided into 4 smaller lots -- would each require a new tap fee? I'll add that question to my list for the county visit I'm planning tomorrow. This whole idea is looking less and less possible (given the asking price for the land/building) but I might as well go through the motions to up my learning curve. And, who knows, maybe a lower offer would be accepted by the seller.
I wonder if a lot that already has water/sewer running to a structure would require fees for each would each require a new tap fee?
Cannot speak for your utility but most give you some credit for the existing infrastructure. E.g. in Santa Cruz, you tear down 1 housing unit with water and build 6 new ones.. you pay for 5 new water services.
Around $7k for each.
Another water company looks at the number of bathrooms before and after to determine fees. Ususally, the teardown had only 1 bath, so this is not good news either.
Small private water companies .. charge much more.. $30k in Los Gatos Mountains for a water meter, a few years back.
You might want to check with AT&T and similar providers (phone/ data/ TV) what they require.
For a small subdivision, we had to dedicate a 10' wide stripe of land to the city and build a sidewalk for them in this stripe. OK.
The stripe had a utility pole that we agreed to move 10' inwards. No problem, cannot be so much to move a pole. However, this pole had data cables for a couple of residences.. AT&T requested $70k to swing their wires. Comcast is on that pole too. After the $70k, I did not bother to call Comcast. [The project is still moving forward.. 70k was 3 years ago.. it's more now]
Durango, CO · Member since 2016 · 92 posts · 12 votes
9y
Thanks, @Randall Brown, I did not think about the other providers (cable, etc.). And, the price tag is rising! I think I read somewhere that if I divide this land into 4 lots, it is not a subdivision -- that would be 5 or more lots, so that might save me some additional headaches that go along with requirements for a subdivision.
I will report on my findings from Planning & Zoning today, for any who are interested.
Rental Property Investor · Denver, CO · Member since 2013 · 4k+ posts · 2k+ votes
9y
@Patricia Miller so unless you are dividing a lot in half you are creating a subdivision in all the counties I have worked in along the front range. Don't forget impact fees. Many counties charge impact fees for roads, schools, and etc since you are adding density. You may have already talked to your county about this since your post is a few days old. Just make sure they tell you about all the fees. You will likely need 5 or 6 new taps of both water and sewer. You will need a licensed civil engineer to design the connecting utilities and to prepare the site plan and drainage plans. You will need a licensed surveyor to prepare the new plat map as well.
Sometimes you can ask the county who has already brought this project to them and what issues di they encounter.
@Tom LaRocque has done some of these kinds of projects on the West side of town so you might want to reach out to him and see what his thoughts are. He might have some real world costs as well.
Durango, CO · Member since 2016 · 92 posts · 12 votes
9y
Thanks @Bill S. I didn't know I could ask the county about issues related to previous offers - worth checking into.
The property went under contract last Sunday -- I had only learned of it Friday afternoon. However, I won't assume that contract will hold, so, I will use this time to keep digging.
History of the property in the past year: 1.1 acres with 2200 sqft commercial building listed Dec 2015, price drop 10/31/16 (from $750K to $400K), immediate offer, then relisted 11/11/16. New contract 11/20.
I was under the impression that with 5 lots you are creating a subdivision but not with 4 or less in this county. I'm also aware that tap fees are crazy high and after speaking to P&Z found that I have to subdivide first before beginning individual projects (one building per lot rule) -- most likely requiring 3 additional taps. I have not confirmed those fees yet.
Property is adjacent to local, collector and arterial roads and is listed TIFA:1 -- Fees will apply.
At the price the property is currently being offered, I'm not sure the numbers work out. Estimating $150/sqft new construction (ballpark), adding $100k in land for the lot for a 2200 sq ft duplex yields a price tag of $430,000. Yes, there are a number of duplexes listed in the $400K - $500K range in the Denver area but those are not cash-flow numbers, I don't believe. Granted, with new construction, if this is turned into a rental, cash flow analysis can be modified to yield a more favorable picture. Not sure what resale could bring, yet.
Rental Property Investor · Denver, CO · Member since 2013 · 4k+ posts · 2k+ votes
9y
@Patricia Miller so a rough rule of thumb is 20-25% of finished sale price. So you can pay between $100,000 and $125,000 for the land if the finished product sells for $500,000. Seems like you are in the ball park.
Durango, CO · Member since 2016 · 92 posts · 12 votes
9y
@Bill S. Hmmmm... very interesting. So this provides motivation to press for more details from county Transportation/Safety division regarding traffic impact fees and any restrictions/fees associated with access to the property (i.e. driveways from adjacent road) + specific tap fees or fees from cable, as well.
Oh, and -- ha -- there is the matter of financing.