Fix and flip margins in Denver got cut in half, and some investors are rethinking the whole model. One recent condo project targeted $300K in profit. Instead, it delivered closer to $130K. Another one got sold off to a different developer, who then took a loss on the resale. So this week’s guest walked away from flips entirely. Today, he’s a Denver luxury home builder putting up ground-up spec homes in three of the city’s most desirable neighborhoods. All-in costs land around $2.5M. Sale prices run between $2.8M and $3.2M. The reason this works right now has less to do with building better houses. Instead, it comes down to who’s actually transacting at today’s interest rates.
In this episode, Chris Lopez sits down with the team behind Modern Traditions Denver, a Denver luxury home builder running a 4-partner development business. Together, they target 3 to 5 luxury spec homes per year. The arc started with a $30K condo flip in Aurora 8 years ago. Furthermore, the team built the whole thing part time, while the guest held a full-time career and raised a family. The structural choices behind that story are worth paying attention to.
The conversation covers why this Denver luxury home builder zeroed in on Bonnie Brae, Observatory Park, and South Park Hill. Next, it breaks down how they underwrite deals using an 80% LTC construction loan from a local credit union at 8.5%. Then it explains why building anything above $4M quickly becomes harder water to swim through. Finally, the team gets honest about the lessons they had to pay tuition for. For example, a busy-street mistake cost them their target margin on a $2.8M sale. In another case, a neighbor parked their car in the alley and blocked a cement truck mid-pour.
If you’ve been watching the Denver fix and flip space tighten up and wondering what’s next, this one gives you a grounded look at how a Denver luxury home builder actually makes the math work right now.
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Timestamps
00:00 Intro and welcome to the team behind Modern Traditions Denver
01:38 California to Denver, starting with fix and flips in Aurora
03:18 Meeting GC Todd and the pivot into new builds
05:22 Why 2022 pushed them out of condos
06:44 Clay Street condo math, $300K target vs $130K reality
08:52 Why $2M to $4M buyers still transact at today’s rates
09:44 The 4-partner team and 3 target neighborhoods
10:58 Deal math, 80% LTC credit union loan at 8.5%
17:12 Full build breakdown, $500K partner equity per project
18:56 3 to 5 builds per year, 18 to 24 month window
20:29 The busy-street lesson and neighbor horror stories
24:00 How 4 partners communicate without standing meetings
26:33 Why putting the GC on equity changed everything
29:35 Five-year vision, sticking with spec over custom
Links in Episode
Connect with Modern Traditions Denver:
Website: moderntraditionsdenver.com
Email: [email protected]
Phone: 720-436-8402
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