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THINKtank: Building Smart Homes in 2021


By Jeff Cornelius - October 27, 2021

THINKtank: Building Smart Homes in 2021
On October 12th, we hosted our THINKtank: Building Smart Homes in 2021 at GRID Collaborative Workspace on S. Broadway. This THINKtank was a Q&A format focusing on all things involved in smart home automation – planning, installation, costs and innovations on the horizon. We were thrilled to have Steve Herbert of Samsung’s Smartthings, Haley Selden of Digital Media Innovations and Lauren Browne of Larsen Development as our panel of experts.

There were many great questions and a healthy discussion from our audience members. Below, we’ve attributed answers with the initials of each panelist who addressed the question and summarized their answers for purposes of this post. We’ve chosen a selection of questions to summarize here, but you can watch the full video on our Instagram channel HERE.

Q. What are the main smart home features are you seeing in your projects?

HS. Every project that we’re doing is going to have a home internet network feature, along with home security. The next step will usually involve climate control like a NEST thermostat or something. And then from there, it does become a little more client specific. We’re seeing a lot of home audio distribution – in ceiling speakers, hard wired TVs and things like that.

LB. In the luxury market, we’re seeing that everyone wants a voice control of their system. We’re seeing a lot of people moving to Josh. With Josh they can say “Josh, turn the TV on. Or, Hey Josh, I’m home” and the lights turn on, music, TV, etc.

SH. I work with a lot of production homebuilders like the bigger national homebuilders. The Top 5 categories I see builders using are lighting controls, thermostat, locks, doorbells and cameras and garage control. With Samsung, a lot of our systems can be controlled with your smartphone, so you’ll have add-ons like music, lighting, things like that.

Q. At what point is it too much? Is there a line that consumers don’t want to cross?

SH. On the builder side, they are obviously concerned with cost, and they are trying to get the highest adoption that makes sense to scale, so you see more of the entry level systems there.

LB. I work with luxury builds so we see everything from a $16,000 system on up to $300,000 depending on the components used.

HS. It really runs the gamut. We do systems that are simply a pre-wire, all the way up to $500,000, so really, the sky’s the limit.

Q. Lauren, at what point during the design-build process to you start discussing smart home integration?

LB. It really starts in the beginning. At one of our first meetings, we’ll ask the client if they want to go high-end or low-end and what kind of systems they are going to want in their homes. It really impacts so much of how the home is designed, so it’s important to have that discussion at the very beginning. For example, if someone wants to include automated window coverings, so that impacts how things are designed.

HS. Yeah, it’s critical that the discussion happens as soon as possible because certain things have to happen in order. We can obviously add things later, but it can become difficult to do that if things have been built one way and then we have to change them after the fact.

Q. How does that work if you’re working on a retrofit like a home that’s already been built?

HS. That depends on the level of remodel that’s being done. Obviously, it’s easier to run wires if a house is being taken down to the studs, but if drywall is in place, we can integrate wireless systems. Wired is always better and sometimes it will be a mix of the two.

Q. Steve, you told us about the basic packages that builders are using, but what are you seeing that’s on the horizon?

SH. One of the things I’ve been working on at Samsung the last 2 years is how a smart home can handle energy management. With Smartthings, you can break down how your home uses energy on a room-by-room basis and a system-by-system basis like how much energy each of your appliances are using and that all reports to a central interface, so you know how much all of these things are costing you. Now we’re working on integrating your home into the utility company so you can maximize your energy efficiency and the utility can inform you of the most cost-effective time to utilize your systems. It saves them energy when they need it most and it saves the homeowner money by running a system at a lower-demand time if they want. We’re also working a lot on air quality systems.

Q. So if I wanted to integrate an energy management system in my new home, what needs to happen on the build side to prepare for that?

SH. With Samsung’s Smartthings and some of the appliances, they simply connect wirelessly to a hub in the home and the usage is uploaded into the cloud, so there isn’t any need to hardwire. You can also mount a monitor in your breaker panel so that it monitors the energy use of individual circuits. A lot of those circuits are dedicated to your HVAC system, or water heater, so that’s how you can monitor each of those without having something connected directly to the system.

Q. Lauren and Hayley, are you seeing a lot of requests for these energy management solutions and air quality features?

HS. It’s on the new and next list for us. Since COVID, we’ve seen an increase an increase in the interest in air quality systems.

Q. Since you mentioned COVID, have you seen a lot of disruption to your supply chain and systems you need?

HS. It’s not too bad, but we are seeing some delays in the AV control systems. We tell our clients to plan for about 8 weeks on the delivery of those systems, which is longer than we saw before COVID.

SH. Oh my gosh, it’s so bad. It’s the bane of my existence right now. At Samsung, a lot of the integration we do is built around our appliances and those deliveries are really delayed right now. 

Q. Steve, what kind of research do you use at Samsung to inform what kinds of products you’re developing?

SH. We do a lot of product research and a lot of it comes from our headquarters in Korea. A lot of the things we see interest in from the US, has already been addressed in Korea, like air quality. That’s something they’ve been dealing with for a long time because they get a lot of bad air floating over from China. Similarly, energy is more expensive in Korea, so they have been focusing on energy efficiency and management for a long time.

Q. Lauren, what problems are you seeing in the field when implementing these systems?

LB. The biggest problems we’re seeing now are the delays due to supply chain issues and the imbalance in the trades with all the construction going on.

Q. Hayley, how are you seeing smart home automation affecting the architects and how they plan?

HS. Well, it’s critical that the architect is involved from Day 1 because let’s say you’re going to be installing a central lighting system, that’s going to completely change the electrical design. Luckily, the architect is one of the first people consumers meet with when designing the home, so they have had to become much more informed about these smart systems.

Q. So, for spec builders, what do you think is a good basic package for them to include for the customer to then build on?

HS. At the very least, pre-wire everything. It costs about $1 per foot to pre-wire, but it gets so expensive to retrofit things after the fact. You should be pre-wiring for home network, locks, lighting, all of those things.

SH. I encourage builders to build as much available and appropriate technology into their spec homes, but it only works if there’s something there that can run a demo properly. If you build it into the home, but the consumer can’t see it work properly, there’s not going to be as much interest.

Q. Are there privacy or security concerns from consumers around these smart home features?

LB. A little, especially from the luxury buyer, privacy seems to be important to them. That’s why the Josh system is so popular because all the data and commands stay in the home, unlike Alexa, which shares information with Amazon.

Q. Steve, are you seeing any roadblocks to consumer adoption of these smart home systems?

SH. Right now, installation is the biggest thing. If you really want to drive adoption, wireless and easy integration is key. These aren’t things that are easy to DIY in bits and pieces, so it helps if they all work together across systems. There’s a new standard called “Matter” that’s an interoperability standard that all the major manufacturers are working on. It will probably be a few years before we see this universal standard in place, but it’s coming. Also, one of the things we are working on is what happens when you sell your home and a new owner comes in? It can be difficult right now to reset everything for the new owner, so that’s something we’re working on at Samsung.

That concluded the curated questions posed to our panel. We opened the floor up to questions from the audience and you can watch an additional 30 minutes of great questions and answers from our panelists by watching the video on our Instagram channel HERE.
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Affordable Housing Innovations


By Jeff Cornelius - September 30, 2021

Affordable Housing Innovations
If you live in Colorado, you know affordable housing is becoming a bigger and bigger concern. In this month’s blog, we’re going to talk about one promising solution for developers and consumers.

According to the latest Denver Metro Area Realtors (DMAR) Market Trends Report, the median residential home sale price in August of 2021 in the six-county metro area was $535,000, a $75,000 jump from the same time last year. While mortgage rates remain at historic lows, down payments and monthly payments on the average home have still risen as the price of homes increase. For many people living along the front-range, finding a home they can afford to buy is getting more and more difficult. The problem affects not only lower-income buyers, but often two-income households where both wage earners have full time jobs.

There are many reasons for the massive increase in housing prices along the front range; positive net migration into Colorado, a backlog of new housing starts, increases in labor and building materials, and the multi-pronged COVID-effect. People want a space of their own and relaxed work-from home rules mean more people are choosing to live and work from home in Colorado. Current homeowners are also looking for larger homes to accommodate one or more home offices and flex rooms that can house additional family members. Many aging baby boomers are also choosing to age in place far longer than previous generations, further constricting available housing supply.

Due to increased rates of homelessness, exacerbated by COVID, Colorado’s larger cities are focusing additional efforts and federal funding on basic, for-rent affordable housing meant to provide their most vulnerable populations safe, affordable housing. Meanwhile, production builders and developers are focused on building for-sale residences in the $400,000-600,000 range where demand is greatest, and profits are maximized. The sizeable market that is left wanting are those looking to purchase a $200,000 condo or townhome, or a detached home in the $300,000-400,000 range.

Merima Brkic, an Invalesco Real Estate Advisor, has worked with many buyers in this challenging market segment and said the biggest challenge is simply not enough supply. “A lot of people think that for this market segment, the biggest challenge is getting qualified for a loan or coming up with the downpayment, or both,” said Merima. “Those are challenges to be sure, but by far the biggest challenge is getting your offer accepted among many offers on limited housing stock.” As part of the affordable housing process, buyers can’t bid more than the list price. So, many buyers are now paying the seller’s closing costs, and sometimes even moving costs, to win the sale, adding even more costs to the process.

Merima said that it can be also challenging for buyers to stay qualified for affordable housing for long periods of time. “There is a sweet-spot buyers want to be in where they make enough to clear the debt-to-income requirement but not too much so that they don’t qualify anymore. If a buyer’s income increases due to a promotion or decreases due to a family member losing a job, they could possibly no longer qualify for an affordable housing program. So, the longer the buying process takes, the more stressful the whole process becomes for this market segment. Lack of inventory definitely adds to this timeline.”

Recently, Invalesco’s Managing Broker, Gilda Zaragoza, spoke with the CEO of one of the most innovative non-profits in the country addressing the lack of affordable housing. Elevation Community Land Trust is a Denver-based non-profit whose goal is to purchase or develop 700 permanently affordable homes in its first five years. These homes, a mix of condos, townhomes and detached single-family residences will serve over 2,000 residents. Elevation will purchase single-family homes for re-sale, but where they make the biggest impact is in providing affordable, attached housing via new construction projects.

Elevation incentivizes developers by agreeing to purchase a finished development at a pre-determined, fair-market price, guaranteeing a sale upon completion. Elevation will then sell the units at 80% of appraised value, making the units affordable to families who meet strict income thresholds – typically 80% or below median household income for the area. Elevation absorbs the loss through the grants and donations it receives as a non-profit.

A recent example is the La Tela development in the Santa Fe Arts District. “La Tela is a perfect example of how our model can help provide quality, affordable housing in a very competitive market,” said Elevation CEO Stefka Fanchi. “Its success also underscores the need for more projects like La Tela in the Denver metro area. Interest was very high and out of 92 units built, we only have one studio remaining for purchase.”

One drawback for homeowners is that Elevation caps equity appreciation at 25% when a homeowner decides to sell a unit or home they have purchased. They do this so that the residence will remain at a below-market rate for the next buyer. For homeowners, having their equity appreciation capped is a condition they are willing to accept. Working with Elevation, they can purchase a home they otherwise couldn’t afford, and they do benefit from some equity appreciation. Elevation also uses a FNMA rider for the loan that removes the requirement for private mortgage insurance, saving the homeowners even more money.

From an agent’s perspective, the time spent working with a buyer in this segment will likely be longer than a traditional buyer and there are additional hurdles to overcome working within the affordable housing guidelines. For agents like Merima though, the joy these buyers experience after a successful purchase is much greater than a typical homebuyer. “After three years of searching for the right home, and after multiple rejected purchase offers, I was recently able to help a buyer close on their first home,“ said Merima. “She was so appreciative of all of my efforts and, for her, buying a home was a life-changing event. It was a very rewarding experience.”

While affordable housing will continue to be a challenge for the larger metro areas in Colorado, and across the country, innovative non-profits like Elevation Land Trust are proving that progress can be made where cities, developers and homeowners all benefit.
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2021 HBA Innovation Summit


By Jeff Cornelius - July 30, 2021

2021 HBA Innovation Summit
July 27 was a beautiful morning at Red Rocks for 2021’s HBA Innovation Summit. Invalesco’s Managing Broker, Gilda Zaragoza, was the Chair for this year’s Summit. She, along with Brian Cassidy and the entire Innovation Summit committee, put on a great event at an iconic venue.

Mark “Stink” Schlereth, former Denver Bronco and three-time Super Bowl Champion was the emcee, and the keynote speaker was Scott Dikkers, founder of the Onion. Mark hosted a panel discussion with Adam Reed of Big Red F Restaurant Group, Qadra Evans of Zillow and Rachel Benedick of Visit Denver to talk about innovation, perseverance and what they’ve learned and changed in their businesses over the last 18 months.

Below is a summary of the stories and key takeaways from each of the speakers.

Scott Dikkers, Founder of The Onion
The only thing Scott has ever been sure of is his love of comedy. In fact, founding The Onion seemed like nothing more than a joke at the time, but The Onion has continued to evolve, and thrive as the media landscape changed around it. Scott fully admits he was ill-prepared to run any kind of business, but he continued to put one foot in front of the other, hire good people, and things continued to progress. Scott said “You don’t have to be good at the thing you want to make better. If you hire good people, and let them do what they are good at, they will innovate for you.”

During Scott’s time there, The Onion was threatened with multiple lawsuits by local businesspeople, governors, pop stars and movie moguls to name a few. One of those threatening to sue The Onion was the attorney representing the estate of Ginger Rogers. After searching for a copyright infringement he couldn’t find, that attorney ended up being The Onion’s pro bono legal counsel for many years, defending the publication’s right to satirize almost anything. That fortuitous turn of events turned out to be one of many during Scott’s tenure at The Onion. Scott’s parting words were “Find what you’re passionate about, and pursue it obsessively.”

Mark Schlereth, 3-time Superbowl Champion and TV NFL Analyst

In addition to Mark’s success stories from the football field and the broadcast booth, it was his personal story of overcoming adversity at home that drove home all the points he was making about perseverance. While his kids were still young, Mark suffered a temporary paralysis, which left him unable do much physically for months. Frustrated with his physical limitations, he decided to help the family out by making lunches for his kids before school.

In those lunches, he’d insert little notes for each of his kids. Sometimes short, sometimes long, sometimes funny, sometimes heartfelt. After a while, his kid’s friends started to gather at lunchtime to see what that day’s note said. Mark said, “Out of this tragic event, an incredible connection and source of pride was formed with my kids.”

Mark’s final words to the audience were “Build a team and take care of them,” and “Remember, it takes 15-20 years to become an overnight success.”

Adam Reed, Big Red F Restaurant Group
As the Director of Operations, Innovation and Beverage for Big Red F Restaurant Group, Adam had a front-row seat for one of the most drastic business challenges faced by any industry during COVID-19. He stressed that COVID forced his company to revisit all previous assumptions and challenge the notion that “this is the way we’ve always done it.” That was not going to see them through the pandemic.

Adam said “The restaurant business has always been a tale of two careers and compensation has never been equal among staff. We took this opportunity to revisit those assumptions and realized we needed to take better care of our entire team.” This team-based approach also involved donating meals to food banks and offering take home meals to hourly employees. The result has been that the staff now operates and looks after each other as teammates. “The mercenaries are gone,” said Adam.

When asked about the most important aspect of leadership Adam said, “The ability to have a clear vision and communicate that vision to your team.”

Qadra Evans, Zillow
Teamwork was a common theme in Qadra’s remarks as well. She said that Zillow has always prided itself on its culture, but COVID brought that mission into much sharper focus. One of the things Zillow did early in the pandemic was to increase the frequency of company meetings from quarterly to monthly to increase transparency and communication across the company. Company leaders were brutally honest with challenges, which inspired the rest of the company and created buy-in to get through challenges as a team.

Of all the initiatives Zillow tried during COVID, two stand out for Qadra. One was creating teams built across the country. These cross-country teams have yielded a wealth of perspectives and experiences that have yielded better collaboration and ideas than they experienced pre-COVID. Another was the inspirational lunches that Zillow sponsored. Qadra said “They encouraged employees to think differently and not be afraid to pivot. As human beings, we’re meant to pivot.”

Qadra’s biggest lesson from COVID? The importance of putting one foot in front of the other.

Rachel Benedick, Visit Denver
As Executive VP of Sales and Services for Visit Denver, Rachel and her team faced huge challenges due to COVID. Visit Denver is a non-profit that is responsible for marketing Denver as a convention and leisure destination – they are in the business of face-to-face gatherings. So, when COVID halted all travel, their budget went from $43M to $12M overnight.

Reinforcing earlier sentiments, Rachel stressed how important her team was and the importance of clear, transparent communication. Rachel said “I took for granted that I saw my team every day. I started having 30-minute meetings each week with everyone on my team, just to connect with them on a personal level – it made such a huge difference for us as a team. The biggest thing we continue to do to get our team excited is clear communication, realistic goal setting and continuing to ask for input. I won’t always agree to what’s asked, but I will listen.”

Rachel said her favorite leadership quality is curiosity. The idea that leaders should always have the answers is outdated. More important is the ability to ask the right questions, learn and adapt. Rachel commented that from COVID, a new sales mindset had taken hold with her team. Rather than the old “ABC” sales adage meaning “Always Be Closing,” her team embraces a new kind of “ABC – Always Be Compassionate.”

The speakers’ and panelists’ personal stories of overcoming challenges this past year, reminded us we can achieve our goals through constant curiosity, questioning the status quo and lots of trial and error.

 
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Everything You Need to Know About iBuyers and the "Instant Cash Offer"

Neneh Biffinger, Invalesco Advisor

By Neneh Biffinger - May 14, 2021

Everything You Need to Know About iBuyers and the
Technology is changing the way we do almost everything, and real estate transactions are no exception. In fact, a new crop of tech companies wants to revolutionize the way we sell and buy homes. iBuyer startups like Opendoor, Offerpad, and Properly are rapidly expanding into new territories, and now established players, like Zillow, are starting to get in on the action. Also known as Direct Buyers, these companies use computer algorithms to provide sellers with a quick cash offer to buy their home.

While the actual market share of iBuyers remains small, their big advertising budgets have helped create a noticeable buzz in the industry. This has left many of our clients curious about them and how they work. In this article, we explain their business model, weigh the pros and cons of working with an iBuyer, and share strategies you can use to protect yourself, if you choose to explore this new option to buy or sell a property.
 
FIRST, HOW DOES THE iBUYER PROCESS WORK?
While each company operates a little differently, the basic premise is the same. A seller (or seller’s agent) completes a brief online form that asks questions about the size, features, and condition of the property. Some also request digital photos of the home. The iBuyer will use this information to determine whether or not the home fits within their “buy box,” or set of criteria that matches their investment model. They are generally looking for houses they can easily value and “flip.” In most cases, their ideal property is a moderately priced, single-family home located in a neighborhood with many similar houses. The property shouldn’t require any major renovations before listing.1 These qualities make it easier to assess value (lots of comparable sales data) and help to reduce risk and minimize carrying costs.

Once the iBuyer has used their algorithm to determine the amount they are willing to pay, they will email an offer to the seller, usually within a few days. The offer should also disclose the company’s service fee, which is typically between 7% and 12% of the purchase price.If the seller accepts, an in-person visit and inspection are scheduled. The iBuyer will ask for a reduction in price to cover any defects they find during the process. Once the sale closes, they will make the necessary updates and repairs and then resell the home on the open market.
 
WHAT ARE THE PROS AND CONS OF SELLING TO AN iBUYER?
Of course, the biggest benefit of selling your home to an iBuyer is convenience. For some homeowners, the stress and disruption of preparing and listing their home can feel overwhelming. And what busy family with kids and pets wouldn’t want to skip the hassle of keeping their house “show ready” for potential buyers Additionally, many sellers like the predictability of a cash buyer and the flexibility to choose their closing date. 

However, this added convenience does come at a cost. An iBuyer is an investor looking to make a profit. So, their purchase offer is usually below true market value. When you tack on service fees of up to 12% and deductions for updates and repairs, studies show that sellers who work with iBuyers net a lower amount than those that list the traditional way.3

In fact, a MarketWatch investigation found that transactions involving iBuyers net the seller 11% less than if they would have sold their home with an agent on the open market.2

WHAT ARE THE PROS AND CONS OF BUYING FROM AN iBUYER?
Buying a home from an iBuyer is a lot like buying a home from any investor. The pros are that it’s usually clean, neutral, and moderately updated. You’ll often find fresh paint and modern finishes. And because it’s uninhabited (no one is living there), you don’t have to work around a seller’s schedule to see the home. However, there are some pitfalls to avoid when working with iBuyers. Speed is of the essence, so sometimes the renovations are rushed and the quality can suffer. Also, their investment margins don’t leave much room for negotiating a price reduction or additional repairs. That leaves buyers —who have already invested hundreds of dollars in an inspection—little recourse if any issues are uncovered.4

That’s one of the reasons we always recommend viewing properties with an agent. During your visit, a real estate professional can point out any “red flags” at the home, provide background information about the neighborhood, and help you assess its true market value. That way, you don’t invest time and money in a high-risk or overpriced property. Safety is also a concern. Some companies allow buyers to access their homes via a smartphone app. While it may seem convenient, it provides an easy way for squatters and others to enter the home illegally.
5


Luckily, since most iBuyers (and traditional sellers) pay a buyer agent’s success fee, you can benefit from the guidance and expertise of a real estate professional … at no cost to you!


HOW CAN I PROTECT MYSELF IF I CHOOSE TO WORK WITH AN iBUYER?
While it may seem like the “quick and easy” way to go, working with an iBuyer can present some unique challenges. For example, they are notorious for presenting a strong initial purchase offer and then whittling it down with a long list of costly updates and repairs once they complete their inspection.2 And unlike a traditional buyer who is incentivized to make a deal work, iBuyers can easily walk away if you don’t meet their demands.

Just like you wouldn’t go to court without a lawyer, you shouldn’t enter into a real estate transaction without an advocate to represent you. Having a professional agent on your side can be especially important when negotiating with an iBuyer. Remember, they employ sophisticated representatives and a team of lawyers who are focused on maximizing their profits, not yours. You need someone in your corner who has the skills and knowledge to ensure you get a fair deal and who understands the terms of their contracts, so you don’t encounter any unpleasant surprises along the way.


Overall, we think the emergence of new technology that helps to streamline the real estate process is exciting. And if we believe a client can benefit from working with an iBuyer, we present it as an option. But there is—inevitably—a cost to the convenience. After all, most iBuyers eventually list the properties they acquire on the open market, which is still the best place to find a buyer if you want to maximize the sales price of your home.


Sources:
  1. The Dallas Morning News –
    https://www.dallasnews.com/business/real-estate/2019/07/11/so-called-ibuyer-real-estate-firms-pitch-programs-to-buy-your-house-help-you-hunt-for-another/
  2. MarketWatch –
    https://www.marketwatch.com/story/selling-your-home-to-an-ibuyer-could-cost-you-thousands-heres-why-2019-06-11
  3. Forbes –
    https://www.forbes.com/sites/alyyale/2019/08/16/study-shows-ibuyers-cost-home-sellers-thousands-is-convenience-worth-the-price/#697ac0c42269
  4. US News & World Report –
    https://realestate.usnews.com/real-estate/articles/what-to-expect-when-buying-a-home-from-an-ibuyer
  5. Inman –
    https://www.inman.com/2019/09/11/police-arrest-couple-found-squatting-in-opendoor-home-with-their-kids/
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REal Investing: ADUs


By Sherri Stinson - April 9, 2021

REal Investing: ADUs
Accessory Dwelling Units (ADUs) have become a hot topic for investors in the Denver-metro looking to leverage the income potential of their next single-family home purchase. However, not all residential lots are created equal. This month, Invalesco Advisor Sherri Stinson talks about ADUs and what to look for when searching for your next real estate deal.

What is an ADU?
Accessory Dwelling Unit or ADU is the not-so-quaint term for a small, independent carriage house built on the same lot as a larger, single-family home. They are also referred to as casitas, granny-flats, or mother-in-law suites. These small side-kick homes have boomed in popularity over the past few years for several reasons, first being the need for more affordable housing options in Denver. Blueprint Denver, the citywide outline for land use and transportation plans, recommends “diversifying housing choice through expansion of accessory dwelling units throughout all residential areas”. The Denver zoning code currently allows for one ADU per lot in 25% of the city, with certain neighborhoods like Platt Park and Berkely receiving an ADU zoning overlay. ADUs add to the available housing inventory without affecting the overall character of each individual neighborhood, thus making them a more desirable housing solution than larger multi-family buildings.

ADU popularity has further increased with the adaptation of short-term vacation rentals through online booking sites like Airbnb and Vrbo. Denver currently permits homeowners to offer such rentals only as part of their primary residence; therefore, ADUs provide an ideal detached but inclusive income opportunity. The onset of the COVID-19 pandemic also sent ADU demand sky-high as homebuyers sought out separate yet functional spaces within their own homes. Accessory Dwelling Units scratch all three of these itches in one compact solution. Allowing lots to be zoned for ADUs is a creative solution for builders, investors and homeowners in the Denver-metro area.

Is your lot right for an ADU?
There are three factors to consider when determining if your property is right for an ADU addition, and they can all be referenced by digging into the Denver Zoning Code (exciting stuff, I know).
  1. The zone lot requirements – which zoning codes allow ADUs and what are the requirements.
  2. The lot size – lot size requirements for ADUs differ based on the zoning lot requirements.
  3. The lot coverage – how big you can build in comparison to the original house.

If you want to do the work yourself, look at the Denver ADU Zoning Map to determine the zone code for your lot. Then, use the zone descriptions to determine whether your zoning code allows an ADU to be built. Once you know that your property is a suitable ADU site, you then need to dig into lot coverage and determine what portion of your lot can be occupied by an ADU in relation to the primary residence.
Here is a breakdown of some of the Denver zoning codes that allow for ADUs along with the minimum lot requirements. For a comprehensive zoning list, please refer to the Denver Zoning Code or a licensed architect.



 
What if I’m not zoned for an ADU?
Denver City Council allows variances for lots not currently zoned for an ADU on a case-by-case bases. Residents can apply for a rezoning after paying a $1,000 filing fee. According to Blueprint Denver, which outlines the long term goals for each of Denver’s 26 zoning districts, “these rezonings should be small in area in order to minimize impacts to the surrounding residential area”.

How to get started:
You can reach out to Denver’s Residential Plan Review staff residentialpermits@denvergov.org to review your property and determine if it is a good candidate for an ADU, and/or hire a licensed architect to conduct a feasibility study on the lot to be rezoned. The Denver Department of Development Services has also created a helpful project guide for detached dwelling units to help you streamline the permitting process. A seasoned realtor with knowledge of ADU zoning can also help you look for properties that meet the city’s requirements for ADUs as part of your initial home search.

 
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