Colorado Springs: looking for advisor on this piece of land

[Jennifer S.]

Hi all, I'm contemplating a return back to US and have my eye on Colorado. I've visited CO fairly often in the past. I'm probably priced out of Denver as I want to stay at a low debt level. I'm looking at making a cash offer on this land but I need help running the numbers on what to build and how to assess the risk of the creek. I'm not sure a buyer's agent would bother with this low purchase price but are there other folks I could pay for advice on it (architect, zoning expert etc). Side note I'm more interested in quirky walkable areas vs outer suburban ones but also want to be fairly safe in terms of crime. I haven't built ground up before but I've done renovations in 3 different countries, including in an emerging market one so I hope to be a bit resilient and roll with the punches. If this deal falls through still happy to connect with people who can advise me on these kind of matters. 

Listing: E San Miguel St Colorado Springs, CO 80903

[Steve K.]

Before paying any professionals I would start by doing as much research on your own as you can and then call the planning department/land use and pick their brain for awhile. 

It appears to be a challenging lot and my primary concern would be whether it is even a practical lot to build on. As a former builder who has seen several fellow builders lose a lot of time and money on stuff like this, I'm a little leery of these one-off residential infill projects to be honest. Land is getting very scarce even here in Colorado, so if there's one lot left in a subdivision that has been developed for a long time, there's usually a very good reason. 

Taking a preliminary look, it appears to be roughly 40 feet wide, 100 feet long, and zoned R-4 SS. The R-4 part means theoretically you could put a 4 unit building on it. The SS part stands for streamside, which is a designation created to protect the waterways. This means you'd have to go through a separate site plan review process designed to ensure that the project is done in a manner that is compatible with the environmental conditions, constraints, and character of the area. No damage can be done to the significant natural features or the banks of the stream. Setbacks for R4 are 25 ft. front, 5 ft. sides, 20 ft. back, leaving you with a footprint of 30x55 or 1,650ft2. Height restrictions and maximum lot coverage are less set-in-stone however the height is probably limited to 2 stories due to it being in a residential area consisting entirely of 2 story buildings, and lot coverage for R4 is usually 35%, so you'd most likely be looking at a a two story building with a footprint of 1,400ft2 (2,800ft2 total). You'll need enough space for the requisite parking spaces for each unit. At first glance, it appears the lot size will allow for a medium-sized single family home or maybe a small duplex. For it to be a buildable lot you need legal access (driveway), and utilities (electricity, gas, water, sewer). This lot doesn't appear to have any of those entitlements yet which to me is a red flag seeing as the surrounding neighborhood was fully built-out a long time ago. 

 The surrounding homes are valued in the $300-400k range except for the one multifamily building just to the north which is in the $750-850k range. Building costs in this area start at about $150/ft2 for new homes (and go a lot higher, often up to $400/ft2 for high-end custom homes). I could be way off on these numbers, but if I had to guess I'd say you'd be looking at about $500k to build a 2,800ft2 foot house there, builder-grade finishes nothing fancy, plus maybe an additional $30-50k in soft costs. Add in the cost of the land ($65k), and you're looking at about $600k. This very rough estimate doesn't account for the unknown of any of the additional hoops you may need to jump through due to having to comply with the streamside designation requirements. 

The neighborhood was originally developed in the 1890's, with most surrounding homes having been built between 1890 and 1940. My question would be, "why hasn't this lot been developed in the past 130 years like all the other lots around it"? Every local builder has looked at, why have they all passed? Probably because due to the costs of building one-off custom homes in this area, you want the property value to be well over $1M for it to be worthwhile, and there aren't any $1M homes in this part of town, coupled with the fact that the lot is long and narrow with a stream running through it, which poses a lot of challenges/risks. But I could be completely wrong, I'm just going off my little bit of experience and the little bit of info in the listing.

Hope that helps, and best of luck! 

Steve