Purchasing a home with the intention of tearing it down and building a new one can be a savvy move, but it requires careful planning and consideration. When does it make sense to tear a home down?
Location, Location, Location: You want a sought-after prime location or neighborhood that has a scarcity of open lots.
Property Value vs. Renovation Costs: A cost-benefit analysis indicates the cost of extensive renovation/addition will exceed the value it adds to the property. Often the economics of the purchase-demolition-new construction route are more financially sensible.
Customization and Modern Amenities: Teardowns allow you to design your dream home from scratch. You can customize layout, room sizes, and features etc. to suit your lifestyle. New homes are built with energy-efficient materials and systems. This translates to lower utility bills and a smaller environmental footprint.
Whether you're eyeing a teardown for its prime location or envisioning your dream home rising from the rubble, here's a step-by-step guide to navigate this unique real estate journey:
Step 1: Assemble a Team of Knowledgeable People
Before you even consider buying a teardown, assemble a team experienced in teardowns to help you through the many aspects of the process. Having the right team in place ensures a smoother process. You’ll want to engage with several key team members:
Real Estate Agent: Work with an agent experienced in teardown projects. They can assist you with finding suitable properties and advise on market insights. Agents have access to market data, and can advise you on property values, trends, and evaluate potential resale value after redevelopment.
Architect: Involving an architect will be immensely beneficial. A teardown project involves multiple steps, and having one by your side can make the journey more manageable and rewarding. An architect can provide valuable advice during the process of assessing the property, identifying potential issues, envisioning possibilities for a remodel/addition or new build, navigating regulations, and recommending other professionals.
Builder: Carefully selecting a builder/contractor is a pivotal step in realizing a successful project. Experienced custom builders know how to navigate codes, regulations, and permits. Ideally, they are involved in the potential property evaluation, and working with the architect to provide preliminary cost estimates, ideas and feedback. If you are considering keeping part of the existing home, they'll advise you on the overall feasibility of a remodel and addition.
You will also need to consult with a demolition contractor, inspector, and mortgage consultant.
You should also explore various online resources focused on teardown homes and learn from homeowners who have gone through similar projects.
Step 2: Choose a Home to Tear Down
With your key team members in place, it’s time to start hunting. Look for outdated homes in desirable areas. Smaller homes on larger lots. These homes are typically priced lower but may need significant revitalization or a teardown.
Evaluate whether demolishing the house would be more cost-effective than doing a remodel/addition to it. Consider red flags like structural or foundation issues, extensive water damage, outdated electrical and plumbing systems, and hazardous materials. All of which can make any renovation costly and challenging.
Assess the potential market value of your planned makeover. If it results in a value higher than newish homes on similarly sized parcels of land, then a teardown might have potential. A teardown usually should support a new house valued at least two to three times the price of the original house at acquisition.
Step 3: Due Diligence Before Buying
Once you’ve found a potential home to purchase, there are several red flags to check for before making an offer to purchase:
Check local regulations: some jurisdictions make permitting easier for remodels than for teardowns. Ensure that the lot can be legally demolished and rebuilt.
Check zoning ordinances: your architect can consult the local zoning department to ensure that the lot allows for the type of construction and home you envision. Most areas have restrictions on building height, setbacks, and lot coverage. Determine if your rebuilding project is limited to the size and height of the original house, or if you can build back larger and taller to what limits.
After the zoning check, consider your local building codes and permits needed. Your builder can advise you here. Determine that they’re prepared and able to obtain all that’s necessary before you make an offer. Anticipate multiple inspections and permits. A general contractor normally seeks permits for demolition, grading, the building, electrical, plumbing, HVAC, utility hookups, tree removal, natural preservation. They should also review any prior permit applications made by the seller.
Verify road access, hydro, electric, gas, water, and sewage system availability.
Do a pre-demolition inspection, which can spot costly red-tape issues like toxic materials and waste disposal requirements that need to be dealt with before the teardown begins.
Check for deed restrictions. These are property-specific and separate from zoning rules. Also check if the property is part of a neighborhood association or HOA. If so, review their by-laws and architectural standards, rules, and procedures. An architectural review committee (or the board if none) must agree to your proposal in advance of the work.
Step 4: Costs and Financing the Deal
Establishing a realistic budget is a critical aspect of the project’s planning process. Understand and plan for all expenses related to:
The property purchase, clear title search, closing costs, etc.
Demolition, waste hauling and disposal. Costs can vary significantly so get multiple estimates for the teardown, waste hauling and disposal.
New construction or remodel/addition.
Surveys, soil tests, utility connections, permits, etc.
Landscaping and interior furnishings.
Fees for any design professionals needed such as architect, interior designer, and kitchen/bath specialist, etc.
Financing options and cost. Financing a teardown and rebuild is more complex than a standard mortgage.
Any professionals as necessary to navigate any complex zoning restrictions and loan negotiations.
Step 5: Design Your New Home
After completing your property purchase it’s time for some fun! The process of crafting a custom home is a very personal and creative endeavor and can be one of the most exciting adventures that you and your family embark upon. Yet, successfully translating your hopes and dreams into a built reality depends greatly on the people you select to assist you, and on the quality of thought and ingenuity that goes into the planning and design process. For a custom home this means hiring an experienced Architect.
Collaborating with an architect allows you to explore design options, layout changes, and creative solutions. They'll help you define your goals and create a cohesive vision for the project. They have expertise in every area of home design including site planning, floor/space planning, 3D conceptualization, material & product selection, kitchen and bath design, and lighting. They have a sharp eye for selecting and organizing spaces, forms, materials, and objects in a functional and aesthetically pleasing way.
Step 6: Engage in Neighborly Outreach
Once you've received the green light from all relevant agencies and departments, you'll have a comprehensive set of final plans that outline the project and its upcoming processes.
Before dispatching the demolition crew, it's advisable to engage with your neighbors and demonstrate how your work will enhance the property, benefiting everyone involved. Understandably, they may have concerns about noise, heavy machinery, and potential hazards. Share the plans and the project timeline with them. Here are some neighborly steps to take:
Comply with local notice rules. Inform neighboring property owners about the planned work.
To be a considerate and proactive neighbor, provide your contact information to address any issues that may arise during the process.
During Teardown and Construction, ensure that nuisance issues such as waste, noise, and potential dangers to children or animals are promptly addressed by the contractors. If possible, have crews operate within regular work hours to minimize disruptions.
Keep Locals Informed – as the work progresses (or encounters delays), maintain open communication with the community. In-person interactions build trust and create a solid foundation for your future with those around you.
Conclusion: Buying a home to tear it down and build anew requires patience, research, and a vision for what it could become. Consult experts, weigh the costs, and envision the future value. With the right team and thorough preparation, you can turn an old or dilapidated property into a blank canvas for your dream home. Good luck with your project!
Considering a teardown or custom home? Contact VAN VLIET architecture | design for a complimentary consultation!
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