Lot Hunting In Hilltop: Teardown Math That Works

You can spot a promising Hilltop lot from a block away, but the real question is what it pencils. If you are targeting E-SU parcels near parks and parkways, a clean read on form rules, site constraints, and resale comps will make or break your offer. This guide shows you how to convert constraints into numbers, avoid common missteps, and back into a confident land residual. Let’s dive in.

E-SU zoning: what you can build

Start by confirming the exact E-SU standards for the specific parcel. Form-based rules in Denver determine height, setbacks, and street relationship, which control your achievable footprint and gross floor area. Verify front, rear, and side setbacks, stepbacks, eave limits, and accessory structure rules before you assume a target size.

Check whether any overlays, conservation rules, or design review apply on that block. Some desired features, like a larger footprint or attached garage, can need variances or administrative waivers that add risk, time, and soft costs. Keep your early program conservative until you have survey, code confirmation, and a feasible massing scheme.

Site constraints that change the math

Lot geometry matters. Narrow, shallow, or irregular shapes reduce efficient floorplates and drive up cost per livable square foot. Orientation affects light, privacy, and where parking and outdoor space work best.

Topography and grading can be a double-edged sword. Slopes raise excavation, retaining wall, and foundation costs, and they can complicate stormwater and utility tie-ins. In some cases, a slope enables a useful garden level, but budget for the added complexity.

Trees and landscaping are not just aesthetic. Mature or protected street trees can trigger mitigation, removal, or root-protection plans that impact your envelope and timing. Easements, rights-of-way, and encroachments also shrink buildable area and can bring extra utility work or legal coordination.

Utilities and stormwater checks

Confirm locations and capacities for water, sanitary sewer, storm sewer, gas, and electric. If mains are distant or undersized, you may face off-site work or upsizing. Identify lateral locations and tap fee implications early.

Plan for stormwater. Denver often requires on-site best management practices for infill. Detention, quality treatment, or other BMPs can add design constraints and hard costs. Alley access can reduce curb cuts and improve street presence, but you may inherit alley repairs or improvements.

Demolition and environmental costs

Demolition budgets vary with structure size, material, and whether there is a basement. Older Hilltop homes can include asbestos or lead paint, so include testing and a remediation contingency. Salvage can offset a small portion of demo cost if fixtures or materials have value; treat that as a bonus, not a line-item assumption.

Park and parkway resale dynamics

Proximity to parks and parkways often supports a premium for views and access. That premium must be quantified through local finished-home comps, not assumed. Target the buyer profile realistically: near-park purchasers favor curb appeal, thoughtful layouts, and outdoor connection. Match your program to that expectation.

Comps can be scarce near parks because lot turnover is limited. When true peers are thin, lean on finished-home comparables and be disciplined on adjustments for size, finish, and garage count. Use vacant-lot trades cautiously and adjust for entitlement status and included improvements.

Underwriting framework: step by step

Use this repeatable process to move from target site to a defendable maximum purchase price.

Step A: Data collection

• Lot legal description, dimensions, plat, and recorded easements.
• Existing structure size and condition for demo budgeting.
• Official zoning and any overlays; obtain the form standards in writing.
• Finished-home comps in Hilltop and adjacent areas with similar character, plus any relevant lot sales.
• Recent local permits on similar infill projects for size and scope signals.
• Local builder quotes or market-rate estimates for cost per finished square foot.

Step B: Define your build program

• Target Gross Living Area, bedroom/bath count, garage solution, and whether you will finish the lower level.
• Outdoor areas within setbacks and yard standards.
• Spec level aligned to Hilltop buyers.

Step C: Estimate ARV

• Select 3–6 finished-home comps that mirror your planned size, park adjacency, finish, and parking. Adjust for differences.
• If comps are thin, derive price per finished square foot, then apply a supported park/parkway premium where evidence exists. Document each assumption and adjustment.

Step D: Hard costs

• Site work: demo, grading, retaining walls, foundation, utilities, stormwater BMPs, driveway or alley improvements.
• Structure and finishes: shell, windows, exterior, interiors, MEP systems.
• Garage and landscaping. Include builder overhead and profit if you are using a GC number.

Step E: Soft costs and fees

• Permits and plan review.
• Architecture, engineering, design.
• Impact and tap fees; any special district assessments.
• Survey, geotechnical, environmental testing.
• Taxes during construction, sales commissions, marketing, staging, and closing costs.

Step F: Carrying and financing

• Interest on acquisition and construction loans, lender fees, and reserves.
• Property taxes during hold, insurance, utilities, and site security.
• Model a realistic permitting and sales timeline with conservative buffers.

Step G: Contingency and profit

• Contingency at 5–10 percent of hard costs, higher if unknowns exist like tree mitigation, utility uncertainty, or potential variances.
• Set a developer profit target consistent with local norms and your capital.

Key formulas

• Total Project Cost (TPC) = Acquisition Price + Demo + Site Work + Construction Hard Costs + Soft Costs + Carrying Costs + Contingency + Sales Costs
• Max Purchase Price (land residual) = ARV − (Demo + Site + Construction + Soft + Carry + Contingency + Sales Costs + Desired Profit)
• Break-even land price: Set Desired Profit = 0 in the formula above.
• Return checks: Profit Margin = (ARV − TPC) / TPC; Profit as % of ARV = (ARV − TPC) / ARV

Comps strategy for Hilltop lots

Prioritize finished single-family homes within Hilltop or closely similar nearby areas. Focus on scale, park adjacency, finish, and garage count. Avoid pulling larger suburban builds that inflate price per foot.

When finished comps are thin, compute price per achievable buildable square foot based on recent infill sales of similar scale. Then apply a supported park premium derived from evidence, not assumptions. Use lot sales only with care and adjust for entitlement risk, timing, and any public improvements included in those trades.

Risks to model and mitigate

• Permitting delays: schedule pre-application conversations and consider an expeditor. Submit compliant plans aligned with E-SU standards.
• Variance or design review: keep early designs conservative and engage neighborhood voices early.
• Unseen site conditions: order a Phase I ESA, geotechnical borings, and a survey. Where feasible, do exploratory demo before closing.
• Trees and any historic constraints: commission a tree assessment and verify historic status early.
• Utility capacity or off-site costs: seek capacity confirmations and tap fee estimates in underwriting.
• Market timing: model longer holds and softer ARV scenarios. Stress test your land residual to those cases.

Pre-bid due diligence checklist

• Title report reviewed for easements; confirm legal description and dimensions.
• Boundary and topo survey commissioned.
• Phase I ESA and geotechnical scope initiated if indicated by site conditions.
• E-SU form standards and any overlay rules confirmed with the City.
• Typical permit timelines checked with Denver Planning and Building.
• Utility providers contacted for service availability and tap fees.
• At least two local GC estimates or indicative bids for the proposed program.
• MLS pulls for finished homes near parks and any recent lot trades.

Negotiation levers that protect returns

• Inspection and contingency windows tied to demo, environmental, and geotech findings.
• Seller credits for specific risk items or partial demo if seller controls the existing structure.
• Escrows for identified obligations that surface during diligence.
• Price structured by entitlement stage, with an uplift at permit or variance approval.

Simple workflow to go from lot to offer

1. Screen the lot: verify zoning form, overlays, easements, trees, and utilities at a high level.
2. Sketch a conservative massing and program that fits form standards and likely setbacks.
3. Pull finished-home comps near parks and build an ARV range with notes on each adjustment.
4. Get site, demo, and construction inputs from local builders and engineers.
5. Price soft costs, fees, and carrying under realistic timelines. Add contingency and profit target.
6. Run the land residual and stress test it with slower timing and lower ARV.
7. Write offers with clear contingency language and a closing path that matches your risk.

If you want a second set of eyes on a Hilltop lot or need help pressure-testing your land residual, we can assist with site evaluation, comps selection, and go-to-market planning for the finished home. Partner with Unknown Company to translate constraints into strategy and Get Access To Our Private Listings.

FAQs

What is E-SU zoning in Denver Hilltop?

• E-SU is a single-unit residential form zone with standards that regulate height, setbacks, and street relationship. Always confirm the current rules for your parcel with the City before relying on any generalized guidance.

How do I estimate ARV near Hilltop’s parks?

• Use finished-home comparables that match your planned size, park adjacency, finish level, and garage configuration. When comps are thin, derive a supported price per finished square foot and apply a documented park premium only if recent sales show one.

What demolition costs should I plan for on older Hilltop homes?

• Budget for structure removal, potential basement demo, hauling, and hazardous material abatement such as asbestos or lead paint. Include testing and a contingency so you are not surprised mid-permit or mid-demo.

Do stormwater requirements affect single-lot infill?

• Yes, Denver often requires on-site stormwater best management practices for infill projects. These measures can influence site design, hard costs, and approvals, so confirm requirements early.

How do trees impact my buildable envelope and budget?

• Mature or protected trees can drive mitigation, removal, or root-protection plans and may limit where you can build. Engage an arborist early and factor related costs and timelines into your underwriting.