I Want To Tear Down This House
Hello Everyone:
I have a house with the following repairs needed. The house has been vacant for 4 years due to a fire in the top floor kitchen. The longer I have this property the more I am leaning towards tearing down and starting from scratch.
Foundation/Structure issues
• Repair and replace cracked rafters in attic
•Replace damaged beams on left, front, rear of house
•replace damaged joist and sub floor
•replace and repair framing on roof
•replace front and rear porch
There are other repairs to go along with the ones mentioned.
Purchased at 10600 (cash); Rehab costs:43000; new house 55000-65000. ARV on rehab 90000, FMV on new 105000.
I have been asking the experts, and everyone is leaning towards whatever there area of expertise is. I wanted to ask an impartial group that may have been thru both sides of the coin.
Please advise.
If you decide to hire a demo crew... make sure they have the right address.
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The only problem I can see with demo and build new would be zoning and/or variance issues. Perhaps the existing structre conforms to zoning due to a grandfathering, while a new structure may not.
Just a thought.
I made the mistake (to keep my crew working) of knocking down a small bungalow on a waterview lot. I could have sold the bungalow as-is for $150,000 profit. Instead, I wanted to build a gorgeous contemporary... and ended up in a variance nightmare.
I learned from that experience. A bird in the hand is worth two in the bush.[ Edited by TheShortSalePro on Date 02/19/2004 ]
It would cost about $60K to build new and the new home on the lot would be worth $105K. Is that correct? Did you want to sell the property or use it as rental?
It will be sold retail.
The FMV after rehab might well be less than $90K and therefore wider spread between rehab FMV and new FMV than $15K. You may be required to disclose to buyer details concerning the fire damage and all the rehab work to correct it. Depending on the type of buyer you get and their motivations, the buyer could come in with inspection contingencies as a negotiating ploy.
ShortSalePro's point is well taken about whether the property as it is now is grandfathered and if the house (or part of it) were demolished, some sort of municipal approval/permit would be required beyond just building permit. However, you should be able to determine that by connecting with Code Enforcement/Zoning. I'd also check about environmental issues re: demolition, and utility issues. Whatever answers you get, suggest you get them in writing, so that you've got a paper trail.
Weighing both alternatives, I would demolish and go new. Cleaner way to sell where house has suffered substantial damage.
Assuminig you are correct that the cost of rehab versus new is comparable, I would likely go for the teardown. You can build a new house with a much more open floorplan and include a few of those nice architectural details that people are looking for today (lofts, tall windows, cathedral ceilings, etc). It should be a lot more appealing to the buyer.
Of course, I have a bad tendency to look at each house as if I were planning to live there rather than just crunching the numbers. Classic "newbie-itess", I guess.