All Forum Posts by: Steven Tawresey

Cost for new builds are tricky right now. Traditionally, lumber is roughly 20% of your construction cost. But lumber prices more than doubled in the last 6 months (although they are trending down, quickly). I don't know how builders and GC's are  managing the large cost swings for that so the following information should be looked at with hesitation. 

1. A tandem house in Denver was just built a block from one of my properties at $280/sf not including land. It was a 1600sf 3bd/2ba. Seems expensive to me.
2. As an architect, my commercial GC's say they are building for around $180/sf sticks and bricks, not land or the utilities that feed the structure. 
3. As a flipper, I'm paying my contractor between $40-50/sf for a complete higher end remodel. $25-30/sf for a lower end refresh.

I have not designed the garage space for the ADU yet, but when I do define the scope, it will include all new electrical, plumbing, HVAC, custom windows, insulation, 1 full kitchen and 1 full bath, exterior paint and a couple of new garage doors. The apartment will be around 550sf and I'm anticipating the cost of the build will be in the neighborhood of $80K, putting my $/sf around 145. That does not include any additional fees the City of Denver may impose. Because of the location, I should be able to rent it out at $1300/mo putting my cost /rent ratio around 1.6. Great for Denver!

What I don't know is how it will affect the overall value of the lot. There are not many sales comps for properties that already have an ADU built out. Anyone seen one sell lately?

@John Driftmier, the process has taken me significantly longer than it could have. It has not been my number one priority. The city states that it should take about 6 months. Here is a link to the timeline... 

@James Carlson, my lot is 5,600sf but with my current zoning, It could be as little as 4,500sf. However, I think it would be difficult to build a functional ADU over a garage on that small of a lot since the building form for an ADU has setbacks and building envelopes that would severely limit the building size. You can see the ADU form standards for all residential zonings here on page 5.3-30 and 5-3.31. 

A few other discussion points that can be used if you or your clients are interested in pursuing a zone map amendment:

Traffic in the Alleyway: From the planning board (paraphrased): "The questions is not whether it will have an impact or not. It will. But the City has already considered this and developed Blueprint and Comp Plan to specifically promote ADU's anyways.

Noise: Any tenant or short term renter would have to abide by the noise ordinances already in effect. 

Public Safety and Welfare: From the Planning Board (paraphrased): "the alleyway is a public thoroughfare and the neighboring residents do not have an interest to protect. "Whoever walks down it, walks down it." The traffic argument was essentially thrown out as a result of that statement.

Comp Plan and Blueprint Plan Consistency: From the Planning Board (paraphrased): "There is no neighborhood in Denver that is not targeted for Growth. Even in low density residential neighborhoods, growth is targeted. The City put the verbiage in Blueprint Denver and the Comp plan to specifically promote "spot re-zones" by making it easier if the owner wants to pursue an ADU. The city council supports this aim as well."

Privacy: From the Planning Board (paraphrased): "There's a fine line here, but we do live in a city. Seeing and being seen is part of living in a city."

Existing Building: I also believe it helped me significantly that the building is already there. I don't think this would have been a deal breaker, but from the planning board "to have a building that already exists, that was built for human occupancy, but not currently used that way, seems contradictory to everything we're trying to do here in the city. If it walks like a house and quacks like a house, it's a house."

Attainable Housing as tool for Wealth Building: I will note, that I used this argument in my application documentation and there was unanimous dissent from the board that this point did not apply to my neighborhood and that it should only apply to low to middle income neighborhoods.  

Hey everyone. I know there are lots of question on this site about Denver zoning regulations and their allowance for an ADU and I figured I share my recent experience working with the city and my neighbors on a 'spot rezone' of my primary residence from U-SU-B to U-SU-B1.

I bought this house in West Wash Park about a year ago and did a major remodel. One of the things that attracted me to the house when we bought it was an existing 2 car garage with an unfinished studio space above it. My intent when I bought the house was to live in the primary while working to get the ADU allowed through the City of Denver. Yesterday, the Planning Board recommended the rezone unanimously.

Part of the discussion on the board was about the City's intent to remove barriers for constructing ADU's, while they work on regulations that allow them city wide. There was some hints that this was being worked on currently.

The process is not a simple one. You need to fill out an application and provide a lengthy documentation process explaining what your intent is, how that intent aligns with the Denver's Comprehensive Plan, Blueprint Denver, and Housing an Inclusive Denver. All of these documents can be found online and there are very specific portions of these documents that promote the use of ADU's as a gentle growth strategy that the city supports. My application, along with all the other spot re-zones, can be found online here if you are wondering what the documentation actually looks like. https://www.denvergov.org/cont...

This was a very contentious issue in my old, established, mostly well-to-do neighborhood. I had to do community outreach to my neighbors and my local Resident Neighborhood Organizations. They both vehemently opposed the application. I did have a decent number of neighbors who supported my pursuit, but Nimby's are a lot louder than people who generally think density is a good thing. One neighbor even went door knocking for signatures on a petition to oppose the change.

That said, the planning board heard my desire to finish the space, listened to the neighbors complaints, listen to the RNO's opposition arguments, and still voted to unanimously approve the measure. 

From here, I still need a number of approvals from Land Use and Transportation, the City Council, and eventually, the Mayor's signature, but I know having the planning board support the measure is a great first step. 

Anyways, I figure some of you may be interested in going through this process. Reach out directly if you have any questions. I'll try to update this as the process continues. 

Cheers.

Hey Guys. I would say, find a good CPA and Lawyer and ask them. My CPA told me I didn't need to worry about it because the LLC didn't have any members outside my household. However, that's from a tax perspective. If we were to get sued, I'm sure a lawyer would follow the paper and destroy the 'corporate veil.'

I have since refinanced my properties into a commercial portfolio loan and the issue isn't as relevant. I still use my HELOC to purchase properties (HELOC >> Personal bank account >> Capital contribution to LLC), but I take enough credit out to cover the loan cost of the project (pay your HELOC with your HELOC). When I refinance, I funnel it all back through the same channels... Bank >> LLC account >> LLC distribution to Personal account >> Personal account to payoff HELOC.

Hope that helps.

Good evening everyone. I have owned a 4-plex near downtown Denver (Capital Hill) for 12 years now and I can count the number of vacant days I’ve had (not months) in all 12 years on one hand.

But I’ve been working on renting a 1 bedroom through my usual channels (craigslist and Zillow) and I’ve gotten almost zero responses. I know it’s priced right cause I haven’t raised rent from where it was 2 years ago. I’m probably going to use the opportunity to do a light rehab and raise the rent, but it’s strange and I’m a bit worried about doing a rehab if I can’t rent it out.

I rented another unit out a month ago and had a fantastic response with Zillow’s new 1st ad free shenanigan. I’m wondering if anyone else has experienced a decline in leads with Zillow’s paid plan?

Also, when I started renting this place out 12 years ago, I was renting to my peers. Now I’m a middle aged father who very clearly is not with the times. Where is everyone else advertising? Facebook marketplace? Tinder? I don’t know...

And lastly, Any thoughts out there on the current state of central Denver small apartment complex stability?

Hey Seattle! My wife and I currently live in Denver but my parents are aging and we will soon move back to my home town just outside of the city. It’ll probably be a few years but really, who knows. I’ve busted my chops in real estate here in Denver and want to start building my network in and around Seattle. Ideally, I’d find a 2-4 unit multi-family property I can buy and renovate now for a long term hold. Something that my wife and I can move into as an interim once we do move up there. However, I know the Seattle market is just as crazy, if not crazier than Denver and without a good team, I don’t stand a chance at snagging a deal. Looking to connect with agents, brokers, contractors, inspectors, potential partners, and other investors who might share some Seattle investing basics with me. Hit me up and Go Hawks!

Thanks @Matt M.

I’ve got a couple a new construction opportunities currently popping their head into my sphere. Does anyone know of a solid, fair priced builder in the Denver metro area who could help with 1-7 single family / duplex type buildings over the next year? Not looking for a design build firm as I’ll be doing the design. Thanks in advance for the help.

Good morning BP! It's been a while since I've posted. Been very busy with work and with Real Estate. I've recently run into a snag and looking for some advice on how to get past it.

I bought a house in Denver with my LLC, a hard money loan and a plan to BRRRR it. I'm almost done renovating, will rent it in short order, and I'm ready for the refinance part. My hard money lender has agreed to write the note for 75% of the ARV for a rate and term refinance, and will pay me the difference between the amount I borrowed and the amount of the buyout. I'll be leaving about $40K of my own into the deal.

That was the plan anyways. What I'm finding out now is that Fannie and Freddie won't loan to LLC's? My broker says I should quit claim it to my name, refinance, then quit claim back. Seems like a lot of exposure and opportunity for the bank to call the note due. Furthermore, it seems like a shady way to do business. I know that I'm not the only one in the country doing this and I'd like to do it the 'right' way.

I reached out to Lending One who quoted me 7%. Ok... that's one way to do it. But that kills my cash flow.

So, how is it done? 

Thanks in advance for your replies. 

Cheers!

You are not a CPA. You are not a lawyer. Yadda yadda yadda. That's ok. I have my own I'm asking. But different opinions are always valuable. I took out a HELOC on my primary residence that I plan on transferring into my llc to purchase a property here in Denver within the week. I will do this using a member resolution stating I contributed 20 percent and my wife 80 percent as that's how the ownership split works. All is well there. But how do I go about paying and tracking the monthly payments to the HELOC. Do I need to do a monthly distribution to my personal account and then pay off the HELOC? Does the 80-20 split need to be recognized in that contribution? Thanks in advance.