Should we demolish our house to increase the property value?
July 18, 2012 6:05 PM Subscribe
Should we demolish our house to increase the property value?
My parents are taking their rental house off the market. The house is not worth much, as it is quite old and in disrepair; and the property it sits on has since been zoned for commercial usage instead of residential. FWIW, there's some commercial development happening nearby.
My parents don't know whether they should demolish the house, or simply board it up. If we demolish it, we would first need to do an asbestos survey, and possibly an asbestos removal. We would need to get a permit to do the demolition. There are various forms and fees we need to pay on top of that. And, after demolition, we would need to clean up the property, of course. So, boarding up the house is much simpler and cheaper in comparison.
The potential downside is that the buyer would need to do all of what we didn't do. But, how turned off would he be because of that? Or, are these things just not a big deal to commercial developers?
Obviously, if the value they get from not needing to do the demolition outweighs what we would have to pay for doing it, then we'd do it.
Is it worth it for us to do the demolition?
My parents are taking their rental house off the market. The house is not worth much, as it is quite old and in disrepair; and the property it sits on has since been zoned for commercial usage instead of residential. FWIW, there's some commercial development happening nearby.
My parents don't know whether they should demolish the house, or simply board it up. If we demolish it, we would first need to do an asbestos survey, and possibly an asbestos removal. We would need to get a permit to do the demolition. There are various forms and fees we need to pay on top of that. And, after demolition, we would need to clean up the property, of course. So, boarding up the house is much simpler and cheaper in comparison.
The potential downside is that the buyer would need to do all of what we didn't do. But, how turned off would he be because of that? Or, are these things just not a big deal to commercial developers?
Obviously, if the value they get from not needing to do the demolition outweighs what we would have to pay for doing it, then we'd do it.
Is it worth it for us to do the demolition?
.. and you won't have to deal with a demo permit which likely is required by your building code.
posted by humboldt32 at 6:29 PM on July 18, 2012
posted by humboldt32 at 6:29 PM on July 18, 2012
Is it possible that the foundation is salvageable? There may be an individual buyer who would be interested in using the foundation and building on it. Just an option.
I would guess that a developer wouldn't be turned off by the property as much as an individual buyer, but consider if your parent's land is large enough for a developer to buy it or consider it.
And the idea to check out the fire department is a good idea!
posted by shortyJBot at 6:31 PM on July 18, 2012
I would guess that a developer wouldn't be turned off by the property as much as an individual buyer, but consider if your parent's land is large enough for a developer to buy it or consider it.
And the idea to check out the fire department is a good idea!
posted by shortyJBot at 6:31 PM on July 18, 2012
Best answer: If the end goal you envision is selling it to a commercial developer, I wouldn't expect demolishing the building for them would really be that much of an incentive, and almost certainly not to the degree that they'd more than recoup the cost of the demolition. The existing structure is almost certainly unfit for anything commercial, so if any developers have dreams about building in that area, they're probably just assuming that they're going to be demolishing stuff. That's just how things work for them. If you're certain that a developer will pick up on the property right away, I wouldn't worry about demolishing it. However, if you have no idea about when that might occur, boarding up the place may involve headaches of its own with squatters and derelict property issues that your city and neighbors won't be too happy about. An unsecured property may result in your parents being fined, and your city may have methods that need to be in place for them to consider an abandoned property "secure".
For some reason, I think asbestos abatement might be an easier matter in a complete teardown (vs. having to remove all the asbestos while leaving the structure more or less intact), but check with a pro to make sure.
Also, commercial and residential zones are necessarily exclusive. Depending on the specific zoning designation, certain types of commercial uses may exist in residential areas, and vice-versa. Changing the zoning designation definitely does not affect the existing structure.
posted by LionIndex at 6:32 PM on July 18, 2012 [1 favorite]
For some reason, I think asbestos abatement might be an easier matter in a complete teardown (vs. having to remove all the asbestos while leaving the structure more or less intact), but check with a pro to make sure.
Also, commercial and residential zones are necessarily exclusive. Depending on the specific zoning designation, certain types of commercial uses may exist in residential areas, and vice-versa. Changing the zoning designation definitely does not affect the existing structure.
posted by LionIndex at 6:32 PM on July 18, 2012 [1 favorite]
Is it possible that the foundation is salvageable? There may be an individual buyer who would be interested in using the foundation and building on it. Just an option.
It'll depend on the OP's location, but this is probably not the case. The foundation for a house would be designed (assuming it was designed in the first place) for a much lighter structure, under much older code regulations, than would allow for anything new to be built on the same foundation. All the loads would have to be in the same place and the building would have to follow the same layout. It's probably impossible just because of the code changes over the years, and it would really restrict any future development. It'd be better to just go clean slate if anything.
posted by LionIndex at 6:36 PM on July 18, 2012 [1 favorite]
It'll depend on the OP's location, but this is probably not the case. The foundation for a house would be designed (assuming it was designed in the first place) for a much lighter structure, under much older code regulations, than would allow for anything new to be built on the same foundation. All the loads would have to be in the same place and the building would have to follow the same layout. It's probably impossible just because of the code changes over the years, and it would really restrict any future development. It'd be better to just go clean slate if anything.
posted by LionIndex at 6:36 PM on July 18, 2012 [1 favorite]
Best answer: I would ask a real estate agent -- one who specializes in commercial properties. S/he may know something about the likelihood that a developer would want your parcel of land, whether it's of a reasonable size for development, and whether or not to leave the house standing.
posted by vitabellosi at 7:14 PM on July 18, 2012 [4 favorites]
posted by vitabellosi at 7:14 PM on July 18, 2012 [4 favorites]
Keep in mind that depending on the zoning a serviceable but unlivable house may be useful to potential developers - they can make money renting it out as short-term commercial space (workshop, storage space, etc), use it themselves as a site office, etc. If they can extract more value than the cost to them of demolishing it, they'll find a use for it.
Check the actual zoning and, as vitabellosi says, talk to a commercial property agent in the area.
posted by Pinback at 7:33 PM on July 18, 2012
Check the actual zoning and, as vitabellosi says, talk to a commercial property agent in the area.
posted by Pinback at 7:33 PM on July 18, 2012
Best answer: I would ask a real estate agent -- one who specializes in commercial properties. S/he may know something about the likelihood that a developer would want your parcel of land, whether it's of a reasonable size for development, and whether or not to leave the house standing.
This. This is a purely commercial decision -- is the property worth more if you do the teardown, vs selling it as-is? -- and the answer will have everything to do with who is buying these properties in your area, what permits might be required, etc.
The basic tension is between you doing the work, and therefor making the property more attractive to a buyer (who might never have dealt with a teardown before), and the fact that a developer who does a lot of construction can definitely get a teardown done for cheaper than you can as an individual. If your likely buyer is the first, you want to do the work; if it's the second you are just spending money needlessly. There's no way to answer in the abstract; it will depend on specifics.
posted by Forktine at 7:36 PM on July 18, 2012 [2 favorites]
This. This is a purely commercial decision -- is the property worth more if you do the teardown, vs selling it as-is? -- and the answer will have everything to do with who is buying these properties in your area, what permits might be required, etc.
The basic tension is between you doing the work, and therefor making the property more attractive to a buyer (who might never have dealt with a teardown before), and the fact that a developer who does a lot of construction can definitely get a teardown done for cheaper than you can as an individual. If your likely buyer is the first, you want to do the work; if it's the second you are just spending money needlessly. There's no way to answer in the abstract; it will depend on specifics.
posted by Forktine at 7:36 PM on July 18, 2012 [2 favorites]
Best answer: There is come commercial growth happening near by.
Your folks should really NOT spend any money doing anything to this property. As Forktine says, it will be relatively inexpensive for a developer who already has contracts for such work as opposed to your folks trying to figure out new territory and spending a huge wad on it.
Definitely contact a broker who specializes in commercial properties. This is a big deal and your folks should be doing some research on their own too to see the potential in that property. Is it a great viable business location? Probably.
What I've seen in my neighborhood, which is zoned as both residential and commercial, is that typically a home in fair condition but is a fixer-upper, goes for $350k to $400k. Sold as a commercial property, it could go for about $1m. Yea, that's in San Diego one block from the freeway and one mile from the stadium, but I thing the principle applies that selling as commercial is a potential cash-cow.
posted by snsranch at 7:55 PM on July 18, 2012
Your folks should really NOT spend any money doing anything to this property. As Forktine says, it will be relatively inexpensive for a developer who already has contracts for such work as opposed to your folks trying to figure out new territory and spending a huge wad on it.
Definitely contact a broker who specializes in commercial properties. This is a big deal and your folks should be doing some research on their own too to see the potential in that property. Is it a great viable business location? Probably.
What I've seen in my neighborhood, which is zoned as both residential and commercial, is that typically a home in fair condition but is a fixer-upper, goes for $350k to $400k. Sold as a commercial property, it could go for about $1m. Yea, that's in San Diego one block from the freeway and one mile from the stadium, but I thing the principle applies that selling as commercial is a potential cash-cow.
posted by snsranch at 7:55 PM on July 18, 2012
Call the local fire department. They may burn it down as a training exercise.
Just so you know, this would be even more Worthless Without Pictures than the pet naming threads. Good luck, we're all counting on you.
posted by AkzidenzGrotesk at 8:32 PM on July 18, 2012 [1 favorite]
Just so you know, this would be even more Worthless Without Pictures than the pet naming threads. Good luck, we're all counting on you.
posted by AkzidenzGrotesk at 8:32 PM on July 18, 2012 [1 favorite]
Response by poster: Call the local fire department. They may burn it down as a training exercise. Lot less to demolish and haul away.
.. and you won't have to deal with a demo permit which likely is required by your building code.
Just an FYI, this is the route that we would take, but we still need a permit.
I've contacted a real estate agent who specializes in commercial properties.. I'll see how that goes. Thanks for the advice, y'all.
posted by wuMeFi at 12:23 AM on July 19, 2012
.. and you won't have to deal with a demo permit which likely is required by your building code.
Just an FYI, this is the route that we would take, but we still need a permit.
I've contacted a real estate agent who specializes in commercial properties.. I'll see how that goes. Thanks for the advice, y'all.
posted by wuMeFi at 12:23 AM on July 19, 2012
I did have one concern about having a boarded up structure on the property and that was liability. Kids could get hurt, you could attract squatters.
But for sure, do whatever your real estate agent recommends.
posted by Ruthless Bunny at 12:08 PM on July 19, 2012
But for sure, do whatever your real estate agent recommends.
posted by Ruthless Bunny at 12:08 PM on July 19, 2012
Another thought re liability: it might be more expensive, or maybe even not possible, to get insurance coverage for an unoccupied building as compared to vacant property. If you have a homeowner's policy on it now, that policy probably has a provision stating that it becomes invalid if the house is unoccupied for more than 30 days.
posted by Corvid at 8:32 PM on July 19, 2012
posted by Corvid at 8:32 PM on July 19, 2012
This thread is closed to new comments.
posted by Ruthless Bunny at 6:07 PM on July 18, 2012 [7 favorites]