Is it really impossible to have a rowhouse built for under 300k?

May 28, 2016 11:45 AM

I potentially have the chance to buy a cheap plot of land within easy subway distance of downtown Philadelphia. Initially this appeared a golden way to own my own home at an affordable price. (Complications inside the fold).

However I looked into the price of having a house built, I was horrified to discover that the cost appeared comparable to (perhaps even more than) buying a fancy new rowhouse ($300k-$400k). I also looked into prefab/kit homes and some "low-cost" initiatives (Philly's "100k home" project), but nothing seemed to run under 300k (plus the cost of the land). I'm be looking for 2000 ft2 or less, non-luxury finishings, on a footprint of about 18'x35'. Am I correct to conclude that it is impossible to build a non-luxury rowhouse for, say, 200k or less? I'd love Mefites to prove me wrong. If I'm wrong, how specifically do I go about having this built? Would it be cheaper to find a vacant/abandoned house and rehab it, rather than building new?

posted by ClaireBear to Home & Garden (13 answers total)

At $200,000, a 2,000 sqft house comes out to $100/sqft. You are going to have a hard time building anything new in a major American city for $100/sqft unless you are able to perform a large portion of the labor yourself or are able to obtain a lot of the materials at below market prices.
posted by ajayb at 12:10 PM on May 28, 2016 [6 favorites]

Someone from your area would have more specific advice, but you could call a couple of residential contractors and get a square foot price - which will vary with finishes/amenities etc - get a range. Building in a congested area on a site with no place for the Contractor to stage materials is going to run the price up - i.e., same house out in the burbs on a decent sized lot would be easier and therefore cheaper to build.
With your footprint of 630 SF and area of 2K SF - that is slightly more that three stories. Going up makes the price go up.

Even "down heah" in SE Georgia, $100/SF is pretty low for a new one story house on a slab on grade. Our firm has seen construction costs going up rapidly the past year or so. Schools were running about 175/SF, now, more like 225 for a very similar building. So yeah, you might be better off getting a "fixer upper" if you can do much of the fixing up yourself.
Getting a house in such poor condition that you have to hire Contractors to do the work is going to put you right back in the high construction cost game, only there are lots of unknowns in rehabbing a decrepit building, so the Contractor is either going to price it so he is sure he won't get hurt, or you are going to signing lots of change orders.
As a note, General Contractors generally charge about 15% to 20% on top of the subcontractor's prices. Most of them earn that money fair and square trying to keep the herd of cats coordinated. Someone who is not familiar with construction administration is going to get taken for a ride by the subs each doing whatever they want when ever they feel like it.
Consider plumbing, electrical, HVAC - these trades have to be in the first time as soon as framing is finished, HVAC is dependent on the framers leaving them room to run their duct work as well. They "rough-in" at that point- ducts in place, wires run, pipes sticking out in all the right places.
Then you have to get interior finishes - "sheetrock", cabinets, etc.
Then those same three trades have to come back and "trim out" - put in plumbing fixtures and hook them up, put in all the electrical devices, connect the ducts to the registers they are putting in, etc. Guess what, they are on another job somewhere. A home owner has zero leverage with them to get them to come back in a timely fashion. The GC they work with all the time? The GC has lots of leverage.
posted by rudd135 at 12:14 PM on May 28, 2016 [5 favorites]

Response by poster: ajayb and rudd135 - Thanks for the helpful replies! Exactly the sort of useful info that I didn't know as a newbie at the house thing. Do you have any idea how significantly the cost would differ between having a new house built versus rehabbing a vacant home that needs significant renovation? There are shell houses in the area for 50k-100k that need a full interior renovation. Also, when browsing online I saw a few construction companies from presumably cheaper areas of the country (e.g. Utah) that advertised that they do jobs around the country and will come to you for a big enough job. Would these likely be significantly cheaper than labor in my area?
posted by ClaireBear at 12:16 PM on May 28, 2016

The first question is: Do you have the cash to do this?
Construction and rehab loans can be difficult to get and often much more expensive than traditional mortgages.

I would not personally attempt this unless I had the cash in my pocket to do this, plus a 20% cushion for the budget.

Meet with a loan officer first. If this were an easy and cheap thing everyone would do it, but very few can in reality get it done.
posted by littlewater at 12:43 PM on May 28, 2016 [1 favorite]

I work for a company that develops housing in the Philadelphia area. You won't be able to get away with less than 150/sf in the city. Rehab costs will vary depending on type of house and amount of rehab needed. To give you an example, We're looking at a job in West Philly where per building rehab costs range from 120,000 to 190,000, not including acquisition or any soft costs. These are currently occupied properties, not shells, but we are replacing roofs, HVAC, Windows, etc. On the more expensive units, we are also gutting the interiors to bring them up to code. I haven't looked at she'll rehab costs in years, but I would bet you'd be north of 225,000.
posted by qldaddy at 12:56 PM on May 28, 2016 [3 favorites]

Also, I would think you need to know some of the ins and outs of construction, as you will have to oversee the contractor, and doing some things yourself, like finish work, would also keep costs down.
posted by Vaike at 1:29 PM on May 28, 2016

Either way it's going to be a lot of work, by which I mean, a job in its own right. Me and my partner had no idea what we were doing (but we're handy!) and we just spent three years getting our lot to the point where temp electric just went in. Now the foundation and shell can go in, and then our lot will be at the same stage as those fixers you're looking at.
posted by aniola at 1:44 PM on May 28, 2016

Can you define what you mean by "row house"? I think this typically refers to what I would call a townhouse, but it's impossible to build a single townhouse kind of by definition. A google image search for row house turns up a bunch of pictures of what I would call townhouses (a bunch of houses attached to one another with the two on the end being semis).

If you can't construct an actual house, you could put a tinyhouse there, but obviously that's a whole other lifestyle.
posted by If only I had a penguin... at 2:44 PM on May 28, 2016

It's worth keeping in mind that 2000 square feet is pretty big by Philly row home standards. Most inexpensive houses for sale right now (under 250k) are in the 1000-1300 square foot range. Build or buy, you need to either accept a lot less space or a much higher cost.
posted by Tomorrowful at 3:06 PM on May 28, 2016

However I looked into the price of having a house built, I was horrified to discover that the cost appeared comparable to (perhaps even more than) buying a fancy new rowhouse ($300k-$400k).

The reality is that a company building 50 new rowhouses can build them cheaper than you can build one. They pay less for materials and for labour, they have a lot of experience with the logistics, and they have huge economies of scale on labour, material handling and equipment, design and permitting, and so on.

A lot of what is marketed as "luxury" is really just cheaply built normal construction with fancy countertops, appliances, etc. Those things don't actually add that much cost, especially if you buy them in bulk.

There are reasons you might want a custom build, but saving money is definitely not one of them unless you are prepared to do a lot of the work yourself.
posted by ssg at 3:41 PM on May 28, 2016 [2 favorites]

Response by poster: Thanks for the reality check, guys - that is really helpful. I was actually hoping for around 2000 square feet in order to live in one floor (600-700) and rent the other two floors out to help pay for the mortgage. It sounds like having a new rowhouse/townouse built will probably be prohibitively expensive for me. I think I'll look into other avenues for an affordable house - possibly attempting to purchase one in habitable but cosmetically run-down condition i.e. not a shell that is so dire that it needs a full interior make-over). Thank you for the help - you all rock!
posted by ClaireBear at 3:48 PM on May 28, 2016

I once lived in a place where the landlady rehabbed floor by floor. She didn't have the money to do it all at once, so she got the very basics fixed (plumbing, electric, foundation), then fixed up the first floor, lived in that, and fixed up the second floor, rented it, then fixed up the third floor, rented that. Then she moved to the third floor to make the first floor even nicer, and kind of cycled through the floors fixing up things fancier and fancier as she had the cash. I don't know if this turned out to be more expensive overall in the end--but it's one way to do it.
posted by Anonymous at 11:25 PM on May 28, 2016

We live in DC, close to Capitol Hill but not in a historic district, in a 1,000 square foot 100-year-old rowhouse. We're looking at renovation/expansion options, and have gotten a few quotes in the last month. One idea is to remove the back of the house, build out a little but also reconfigure the downstairs kitchen and upstairs master bath. We'd also move the stairs. New cabinets, new appliances, two redone bathrooms, about 100 extra square feet. That's $300,000 here. Just renovating the kitchen and baths, but no structural work, is 125.
posted by MrMoonPie at 1:13 PM on May 29, 2016