Is it cheaper to tear down our existing house and rebuild, or buy a new construction?

[Anonymous]

Anonymous wrote:NP here. I'm not trying to be snarky, but I am trying to understand the practical math here. If you live in, let's say, an 800K house now and would like to upgrade. Just to keep it easy, let's say you own it outright. If you sell it and keep the money, minus fees, and then add $500K you end up in a nice 1.25 home or thereabouts. If you tear down your home you have no sales profit to put toward a new house. Can you really build a 1.25 value home for that same 500K? It just seems that when you tear down and don't have any profit from a sale to put toward a new house you'd have to end up spending more, wouldn't you?

So if you live in an 800K house let's say 500K is the land and 300K is the home value on the land. For the most part around here it is the land that is the real value. Homes can be built relatively cheap. Older homes don't have the layouts or the space you might want. You can build a semi-custom home for a number of prices and you will end up getting what you want and taking some of that value into the resale. So take that same 500K and you would have something pretty grand.

http://www.webuildonyourlot.com/model-comparison-in-grid-view/

[Anonymous]

Anonymous wrote:

Anonymous wrote:NP here. I'm not trying to be snarky, but I am trying to understand the practical math here. If you live in, let's say, an 800K house now and would like to upgrade. Just to keep it easy, let's say you own it outright. If you sell it and keep the money, minus fees, and then add $500K you end up in a nice 1.25 home or thereabouts. If you tear down your home you have no sales profit to put toward a new house. Can you really build a 1.25 value home for that same 500K? It just seems that when you tear down and don't have any profit from a sale to put toward a new house you'd have to end up spending more, wouldn't you?

So if you live in an 800K house let's say 500K is the land and 300K is the home value on the land. For the most part around here it is the land that is the real value. Homes can be built relatively cheap. Older homes don't have the layouts or the space you might want. You can build a semi-custom home for a number of prices and you will end up getting what you want and taking some of that value into the resale. So take that same 500K and you would have something pretty grand.

http://www.webuildonyourlot.com/model-comparison-in-grid-view/

Yes, I understand that the land it the bulk of a home's value around here and I can see how building new might mean you end up with the same or better value when you ultimately go to sell your home some day. But right now, when you're talking about how much something is going to cost you, won't there be more money out of pocket by the time you pay for the new build, the rental property while you can't live at home, plus the demolition fees? The value of the land itself is important, but it's all theoretical until you want to sell your house. It just seems that knocking down and building new would cost you more, lead to a bigger loan, etc.

[Anonymous]

You would spend the same ~500K out of pocket, the pp gave you the basic math. Why does it seem like it costs more?

the additional expense would be renting while your home is being build, however you won't have to pay builder/developer markup that can be 20-30% on new construction.

[Anonymous]

Anonymous wrote:You would spend the same ~500K out of pocket, the pp gave you the basic math. Why does it seem like it costs more?

the additional expense would be renting while your home is being build, however you won't have to pay builder/developer markup that can be 20-30% on new construction.

If you teardown and rebuild the builder you use will still charge a markup. Maybe not 30%.

[Anonymous]

Anonymous wrote:You would spend the same ~500K out of pocket, the pp gave you the basic math. Why does it seem like it costs more?

the additional expense would be renting while your home is being build, however you won't have to pay builder/developer markup that can be 20-30% on new construction.

I see the builder's basic price structure, but when you look at the plans there are an awful lot of "optional" spaces included, without which the house probably isn't going to be worth the hypothetical 1.2. There is no information about how much these optional rooms would cost, or how much to upgrade finishes (lots of carpet featured instead of hard wood, for example), etc. So with this 500K, you would need to pay 100K for permitting and tear down (according to a PP), you'd need to pay at least 35K for a place to live during the build (and that figure seems conservative around here) and a few thousand for miscellaneous expenses like storing or moving your furniture twice. Can you really build a house that's going to be worth 1.2 for the remaining amount?

[Anonymous]

Excel is your friend. Get quotes from builders for extras that you want, permitting and teardown and length of construction. Get similarly spec'd new construction houses sold for comps (redfin). Check how much rent is for what you need (house? Apartment?). Get recent comps for your own house to be sure that it will go for 800K. Column 1 total costs to teardown and build, column 2 1.2 mil minus net profit from potential sale of your house. Nobody here would give you precise estimates, you need to figure out your wish list and shop it with a few builders.

[Anonymous]

What did you decide to do? We are in the same situation on the west coast - curious how it turned out for you

[Anonymous]

How about remodelling as of a new wing on the north end app 1000 so ft

[Anonymous]

It depends.

[Anonymous]

We have a similar dilemma.

Our house was built in1963. The original builder didn’t use any rebar in the foundation. We got a foundation crack during the1994 Northridge earthquake. Over the years, the crack has gotten worse.

Houses nearby (mind you, also lacking rebar, but perhaps without a similar foundational crack) are selling for $750-$775,000.

We LOVE the area. The question is, do we rebuild (after finally being free of mortgage payments) or move to a new house in a cheaper area?

[Anonymous]

I want to tear down and rebuild 1,700 sq ft is there anyone in the Mississippi area that does that kind of work and what I am looking at as for as price. thank you

[Anonymous]

Building yourself is cheaper. We had a 1.6m budget in mclean. After looking at homes at that range we ended up buying a 800k lot and building for 800k for a 7000sf house. House appraised at 2.3M. if we bought new construction it would have been 2.3m way out of our budget.

[Anonymous]

Anonymous wrote:

Anonymous wrote:9:11 here. PP, we did not use NDI. I would rather not say who we used, but we found that there are at least a handful of small to mid-size builders in Bethesda who will build a house for under a million without compromising quality. I personally preferred the smaller builders to the mass production ones.

A lot of the builders I have heard of are listed here on Mary Murphy's website: http://maryjmurphy.com/new_custom_homes

Thanks for the link. This is helpful.

Interesting list, but it doesn't include high end builders.

[Anonymous]

All of this thread is nonsense.

Just DIY the teardown and rebuild. Rent a dumpster and hire some guys hanging around Home depot. It is not rocket science. Seriously I have built a few houses like this and easily sold them. Invest in some quality tools.

[Anonymous]

Anonymous wrote:Building yourself is cheaper. We had a 1.6m budget in mclean. After looking at homes at that range we ended up buying a 800k lot and building for 800k for a 7000sf house. House appraised at 2.3M. if we bought new construction it would have been 2.3m way out of our budget.

What builder did you use and were you happy? High, medium or low end finishes?