When buying a new property with a house that needs a complete remodel, what are the cost differences between demolishing and building a new home vs a complete home remodel.
1 Like
There are many factors to consider.
Just to name a few:
- Acquisition price and cost to renovate -than- Appraisal value after renovation
- Structural integrity of home
- *Is house in a historical district and what are the restrictions involved
It really depends on your location and situation. For example, in Northern Virginia it typically makes sense to tear down and rebuild. The housing stock is old but the land values are high and the cost of construction is affordable. Building a new house in that area typically creates equity immediately. It also ensures that the house is built entirely to code and has all the modern conveniences without the ancient headaches. There are a few niche situations where new regulations make it almost impossible to build on a specific lot and so keeping the existing foundation makes sense so that you are “grandfathered in”. However, I’ve seen that in less than 1% of cases. There also may be some consideration to the value of the architecture of the existing home. Most of the homes in our area do not have much preservation value except in some very specific situations such as colonial-era Old Town Alexandria. That is how it is around here. I imagine the housing stock age and the land value situation are similar in Los Angeles but I’m not sure about the other considerations.
New Construction:
For a new, single-family home, you can find a GC to build it for $200k-$250k. The lot will probably costs around $50k. So, you can complete a new home project for around $300k.
The advantage is that you have full-control over the design. If you want a small, 10x12 gym in your basement, you can ask the architect to incorporate the space in the design plans. Then, once the prints are complete, you can submit for permit and begin the project (once approved), knowing the exact cost of the project. This is a great advantage to new construction.
The downside is the lot may not be in an area that you desire such as suburb vs city or rural vs urban.
Gut-Rehab
If you are considering a gut-rehab project, then consider the hidden costs of the project. Make sure to allot at least 20%-30% in addition to the budget for extras. As a GC, you can review the project, but once the walls are open, all issues will be exposed, and these can account for major renovation dollars, so be flexible and prepare yourself financially for such costs. It will be much better in the end.
Also, space planning is more difficult and can be limited; however, you can work with an interior designer and a carpenter/GC to modify the space to make it your own - this can be great fun! And, as far as project costs are concerned, you could complete the project for $200k, which would be more cost effective than a new construction build.
Either way, partner with a reputable GC, do your homework and enter the project prepared.
Great question Daves Remodeling Inc.
In denver the cost to completely remodel a 2,00 sqft house is between $70-$100 a sqft. If you bought the house for $100-$120 a sqft, than its probably worth it, if its in a good and up and coming area. new construction costs are between $175-$300, plus the cost of the property.