All Forum Posts by: Kyle Donath

@James Carlson Thanks! I've read that these "rules" don't apply on pretty much every Denver post made in the past 4 years, but it builds confidence to hear it again from an experienced local on a project within my future realm of possibility. 

Howdy! I'm a Denverite looking through the numbers in the area for my first deal as well. 

How did you make the numbers work? A 300k loan would cost you about $1,900/mo. The 50% rule would want this to rent for $3,800/mo, and the 1% rule would want $3,000/mo in rent. Seems like this wouldn't hit either of those rules. Are you cash flowing including vacancy and repairs?

Thats quite the cashflow for a SFR! For my own learning, how does this fulfill the 50% rule?

At $2,630, shouldn't this be looking to generate at a minimum $5,260 in rent per month to be considered break even - per the 50% rule? 

Good morning everybody,

I'm a new member here and just wanted to say hello to everyone! 

I am Connecticut raised, received a degree in architecture at Wentworth Institute of Technology in Boston, Massachusetts, and have been living and working in architecture in Denver, Colorado for four years in June 2020 with experience in developer driven SFR, Duplex and Multifamily as well as custom single family residence design and project management. I am currently studying for licensure exams and plan to have an architect's license within the year.

With admiration for the lifestyle my developer clients have, and personal impacts that design has on custom SFR clients, and my personal love for nature and an active lifestyle, I have made this account for research and connections for my introduction into real estate development. I plan to purchase land adjacent to higher end resort towns, design and build smaller, very modernly styled and mountain contextually sensitive homes. Using the knowledge I've gained from working with developers to produce the best product possible while still making a profit, my goal is to provide quality design within proximity to world class skiing that is financially available to everyone.

Lots of great points here, I'll address them by response: 

@nik moushon my research shows me a hand full of both surveying and geotech companies in the town of fairplay, as well as nearby in summit county, so I'm hoping travel costs will be kept to a minimum and stay around 3k total. Structural engineering could be done prescriptively, however with the high wind and slow loads and mountainous siting, I am leaning toward using an engineer I've worked with on many projects before for a reduced rate, say 2k. Plus permits and review fees, 8-10k seems within the realm of reality. 

Heavy equipment should be limited to a skidsteer for grading and excavator for footings. Doing quick research from local companies, both have rental rates around 1k per week. I'm sure I could tow these smaller machines on my own, but we'll say 4k total.

With these, I'll be able to perform all grading, and excavations, and cut the driveway. Add estimated 2k for materials. 

Water and septic will be a doozy, but at least there's a government resource for looking up neighboring well depths which are averaging 225ft. The drilling company I spoke with puts costs at around 20k including installed pump and tank. This leaves septic which I have limited info on thus far. For now I'll assume 10k although I will be performing the work myself.

@Bill S. Frankly, I haven't dug very heavily into finding financing yet, as building won't begin until early summer of next year. I'd have 20-30% down at that time so my limited research makes me think I'll do ok here. Calculators have me estimating about 5k.

@JH Bridge a lot of good advice on planning for being a good distance from Denver. Concrete will certainly be an upcharge from Denver, however there are several companies local to the project area that I would contact first to keep that down. It's hard enough to get concrete scheduled in Denver as it is! Their availability is going to be key in getting this project dried in within the 6 month build season of the area.

This updates rough numbers to:

-35k land

-100k loan + 5k fees

-10k permits engineering survey soils

-30k well + spetic

-electrical and phone hookup placeholder of 10k

-6k for heavy machinery and gravel drive

This rounds out to 196k total costs. My only comps in the area of this squarefootage are older homes selling for $250k, so this will be something I need to go over with a realator to see how far above this I'll be able to get. With estimated 15k in closing costs, I'm not very into 40k profit for this much work and risk. If I could clear closer to 300k, it could be game on. 

My next steps are more research and quotes for specific lots to aid in clarifying costs.

@adreaweule Thanks for your input! Do you find this too low for 80% self built? My research has been leading me to a rule of thumb that costs to build are about 50% materials 50% labor, and this was based off of the $200/sf figure.

And you are right, I left utilities out! Electric and telephone at the road. Well and septic on site, and gas via tank if determined that it would be cost efficient. Given the lots are on a mountain, I'd expect wells to run more expensive and septic to be average given how common they are in the area. 

Good afternoon Yall,

I am a soon to be licensed architect preparing to purchase a lot a half hour drive from Breckenridge, Colorado in a thickly wooded, slightly sloping subdivision that sprawls up the mountainside with plans to build a small, modern and well designed SFR.

Some background on the area: Breckenridge was the most visited ski resort in the US this year, and constantly growing in popularity. Up the valley to the north is a heavily developed couple of mountain towns that serve the many resort towns of Summit County, leaving down the valley over a well plowed mountain pass to the south to be the only option for future development. The specific area I am looking toward is the Valley of the Sun Subdivision of Fairplay, Colorado, where lots are selling from $20k - $60k depending on how far up the mountain side they are. Higher up = less maintained roads in the winter, and this is a ski house, so access during storms is key. 

My plan is as follows:

-Purchase a lot of ~1 acre for $30k-$35k in cash.

-Building permit can be acquired for only permit fees, structural engineering, soils testing and surveying fees. I will provide all architectural services. Approx. $8k.

-Construction of new 1,000SF home - 2 bed 2 bath I will be the GC (will receive license for FHA loan), and my friends, father and I will be performing all of the framing, windows, flashing, most MEP, insulation, dry walling, painting, finishing. Subcontracted will foundations and limited MEP work. Estimated costs at $100/sf will be $100k funded via FHA loan.

-Comps in the area are selling at around 250K for cookie-cutter 1990s mountain lodge style homes that need updating. I am confident that the mountain-modern style I seek to design to will stand out from the competition in a positive way. 

-Total costs ~150K for a home I can conservatively sell for $250k and roll into the next property in the area, the following year. 

So, seasoned developers, what am I forgetting and what am I getting right? My current time to buy land is May - when snow is gone, and building could start soon after. Thank you in advance! I'll be active here to keep answering questions to clarify everything I haven't touched upon!