All Forum Posts by: Dorothy Ma

@Nate Wightman

Both @Bill S. and @Travis Sperr are right. In an ideal world, these could be great, but the moment you get into zoning and code, you'll learn quickly why it has not been done and it's because of the strict restrictions. 

As an architect working on several multifamily residential projects with the city of denver right now, I can assure you you'll need to adjust your plans to fit their box.  Parking limitations are generally one per unit, with setback requirements that dictate where you can or cannot park.  I just had to change one of my projects because zoning code will not allow a garage or parking within a certain percentage on one side of my lot.  There are site sensitivity restrictions, fire and building code (if you are separating between floors for up down you need to fire rate the floor like you would fire rate the party walls that separate units, which can get expensive), etc..

As Travis mentioned, once it becomes up down, it's no longer a duplex or townhome, it's a condo.  Lenders will not lend on it as a townhome because you need to own the land beneath and above.  Your terminology gets confusing too, it's either a duplex or townhomes, not both.  Duplex indicates you have two attached units, if you have multiple buildings of duplexes on a zone lot, the zoning does not consider this a duplex.  Your zoning code will dictate how many units and how many stories you can build, you can only build multifamily if you are zoned MU or MX in denver, and then usually there is the number of stories that follow, and 3 is typically the max.

Do you already have the land? If so, you can look up the zoning designation on the city's zoning website.  You can review the zoning code for the parameters of what you can build, but I would highly recommend working with an architect.  Then set a conceptual meeting with the city, show them your plans, and they'll let you know whether or not they'll let you go ahead and submit for the sit development plan.

@Daniel Lehman

Typically for projects small like fix and flip renovations or rentals, interior designers are an additional expense i would steer away from.  There scope of work required in these projects for interior design is limited, and I would say most investors do part of it themselves.  In the professional world, when an architect uses an interior designer on a restuarant project, for example, the job of the interior designer is to prepare interior drawings to be included in the permit drawing set.  In small residential remodels, drawings like this nature are not required by the city, so then the role of your interior designer is really to pick out materials like tile and paint colors.  You'll learn real quick that these fees are budget items (particularly for rentals) and not the best way to spend your money... unless she's doing it more for experience and you're not being charged the regular rate of an interior designer, or you can make sure you cap her scope and hours and agree to a reasonable flat fee.

There is really no legal implication, interior designers do not stamp drawing like architects and engineers so it doesn't matter that she's in school or not.

@Scott Heiman

Welcome! Bear valley is a nice area to start. I would suggest you try aim for a bit higher cash flow per month.  With rentals, there are always things that come up, so you'll need to account for that contingency.  Your handy background is great, and you might have to do a lot of tlc to get a deal in this market.  As Dan mentioned, this market is tough so you'll need to be a little patient.  But having to do more work upfront also means more upfront cost, so you'll want to recoup it back in cash flow, I usually aim for $500+ and all my properties are above that (I understand this market is tough so maybe $350-400+ these days)  

Also, I would recommend looking at single families rather than condos, particularly because of HOA costs. These can be $200-300 per month and that take a huge chunk out of your monthly cash flow right there. Let me know if you have questions, I'm happy to chat and give you more pointers as you get started.

@Derik S.

The question is how involved of an investor do you plan to be? Are you talking rentals for buy and holds or are you talking fix and flips? 

I think rentals are definitely manageable from out of state, if you have someone local to manage it for you. 

 In terms of flips, I personally would not buy flips outside of a 30-45 minute radius from where I live because of how involved I am in my projects.  Unless you have a project manager or contractor you completely trust, I believe it's really hard to not be close by.  I stop by my flip project on a daily basis.  When you're less involved, costs always add up and when mistakes are made (and trust me there will be plenty) by your subs or contractors, it's best to catch them early on than wait until they are all the way done to have to tell them they did it wrong.  

@Nate Wightman, @Travis Sperr is pretty accurate on hard costs at $140 p sf in the denver metro area for mid-higher end, modern multifamily new builds.  I have a 6 unit townhome project in denver breaking ground and my construction hard cost estimate is coming in around $135-$140.  

In terms of types of construction, in colorado stick frame seems to make the most sense still in terms of cost effectiveness for small residential projects.  Modular is great in places where labor costs are high, and maybe if you're building to the dimension of shipping containers/trailers so that it can be easily transported and pieced together.  Otherwise, the cost of transport and other factors with building modular doesn't justify much savings compared to stick frame in the Denver market.  

I've designed a lot of charter schools using tilt up, and like mentioned earlier, it's great for taller, larger projects like gymnasiums, etc, but I just don't see it for residential, particularly with small two to three story multifamily. In commercial projects, tilt up is cheaper than steel framing since building type requirements per code and fire ratings rarely allow wood framing for commercial and institutional projects.  However, in residential, which is mostly always wood framing, if you use concrete, you'll still need to fur out (frame out) the walls for electrical, insulation, etc.  Therefore, totally redundant.

Same goes for SIP.  I've looked into SIP panels for my previous projects but even for a 6 unit, 3 story town home, it doesn't make since cost wise and came in more expensive than stick frame.  Also, consider SIP requires a large lot to be able to lay out all the pieces so they can put it together like a puzzle, and most residential lots just don't have the size to allow for this, which is the same issue with tilt up as well - both require space to layout the panels, and cranes to lift them into place.

There is RS means which is the industry standard for cost estimating.  They have an online subscription you can use.  You can put in your locations and it will base your estimates off up to date, regional prices, however, it's based on an average and is still in the end, an estimate.  Until you get bids from your contractors and subs, all estimates have some percentage of contingency to cover for the changes I the market.

@Sameer Patil, I agree it's a lot of work.  I think this is something you'll need to dedicate full time to if your goal is to become a developer or you can just simply act as the investor and partner with a developer. 

I would recommend you network with developers, architects, and contractors that have done the type and size of development you're interested in in your area.  The process of going through zoning and city approval is enough in itself to drive you mad, I feel like their goal is anti-developer so it'll be an uphill battle, especially for a city that is very urban and sustainability conscious like Seattle.

I'm not familiar with the Seattle market but there's a development/design build firm out there I really like: dwell development.  Look them up and check out their work.

I'd imaging your building costs are pretty high.  Here in Denver, my current 6plex townhome project is around $135 sf and that's after working really hard to budget and value engineer.  

Good luck!

I'm not familiar with Los Angeles zoning code, but make sure you have city or zoning approval. Your architect should be able to submit these plans with two houses to the city and until you get that final stamp of approval, I would not just go on his word. My understand of an accessory dwelling unit here in Denver is that it cannot be sold separately. You can have the two separate structures, and rent out the ADU, but that's exactly what it is " an accessory to your main home." You will need to subdivide the lots through zoning to be able to sell it separately.

Check with your city's zoning website.  All this information should be public and searchable, or go speak to someone at the city yourself.

I agree with the previous posts - best option is to sell and cut your losses.  Renting will cause wear and tear to your brand new flip, so unless you're planning on living in it or renting it for a long time, it doesn't make sense to dirty it up before you have to sell it soon anyway.  It looks like you may have out priced yourself, and may need to drop the price significantly - the one next door that sold for 432K while is not bigger, still has same number of bdrms and baths.. I think that's a pretty solid comp for this property.  

I also agree with @Anson Young, while basement master baths are not desirable, I've definitely done a few in my flips in the past just because configuration made the most sense without having to re-structure everything.  And a master suite in the basement is always better than no master at all, as long as the numbers make sense.  However, that bathroom looks huge! I think you could have easily configured it to be a walk in and a master bath or added another room out of that extra sq footage.  Also, from an architect/designer and female perspective, always put a double sink with lots of counter space in the master.  I understand these are after the fact comments, but it may help with your future flips.

@Miles Stanley, I have a similar background having worked in the a/e/c industry in architecture. I've always believed architect as designer and developer made the most sense, and for me it's about having design freedom to create better spaces that are not purely financial and developer driven.  Owning renting properties and doing fix and flips in the past few years has allowed me to get into new construction development.

@Caroline Lowe, There is some give even if you've lived at the property for one year in terms of capital gains tax.  My question to you is how hot are these neighborhoods in terms of future appreciation (how long would you have to wait) and what condition are they in in terms of managing rentals from another state if you do move.  As a landlord of several properties here in Denver, I'm aware something always comes up.

@Micki M.'s suggestion of a cash out refi could be a great idea.  I just recently did this and pulled out 80k from one of my duplex rentals and even after the refi, it still cash flows quite well - definitely worth it.  We had to get a little tricky with the refi process since it was an investment property but I'm happy to share details if you'd like more info.