Teardown/To the Foundation Reno - How To?
February 26, 2018 11:46 AM   Subscribe

My family has made the decision to move to the burbs and I'd like to explore the possibility of tearing down or gut renovating to build the perfect moderately sized home.

Our style is much more "Jewel Box" than McMansion. The things we see at our price point are mostly too big for us, and things at lower price points aren't really what we are looking for (dated, unattractive) in the nabes we've targeted due to location and schools.

So I wanted to explore the possibility of a building something for ourselves but I don't really know where to start the process?
Should I interview Realtors first? Architects? Lenders?

What is the most common way to finance a project like this? Does it make sense to speak to Architects before we find a lot we like? Is 30 months enough lead time? Should I be prepared to fund the entire project at closing of the lot? Or does it pull down over time - i.e. as the construction loan is pulled down I forward more equity? Is the architect a reliable estimator of costs? Should I be looking to hire a GC at the same time? Or does the architect have a role in that?
posted by JPD to Home & Garden (8 answers total) 2 users marked this as a favorite
Our intention would be to build something very contemporary.

Oh also - is rebuilding on the same footprint given cost and planning issues something we should consider when considering candidates?

Do teardowns mostly get sold to builders w/o hitting the MLS - given the brokers basically want to get the re-listed McMansion as a listing?
posted by JPD at 11:50 AM on February 26, 2018

It's a chicken and egg situation -- on one hand, you need to know what kind of house you want to build (building footprint, layout), but then have to see what's available (at your price) and what can be done with the available house (what does the locality allow, permitting, setback lines etc). Some of that a good real estate agent will know. Look at neighborhoods where recent remodel/reno work has gone on to get ideas.

A GC is a project manager, most of all -- they line up the subcontractors, make sure the job goes smoothly (as smooth as possible, and none are smooth), handle permits, inspections etc, they hand-hold/talk-down-off-the-ledge the client over everything that goes wrong. Good ones are gold. I don't have good advice on how to find a good one, other than word of mouth.

Cost: banks can give you construction/bridge loans, but if you're buying a house to tear down, you may need to bring a lot of money to the table to start with. A lot of aughts mcmansion teardowns in my parent's hood were cash-sales (to buy the house), and then financed construction to build.

We sat down w/ a builder about doing a reno on our house, and he talked a lot of sense into us. Might be worth asking about for a GC recommendation, and offer to pay them for their time to get a reality check.
posted by k5.user at 12:20 PM on February 26, 2018

This happens a lot in my area, including the house immediately next door. From what I could see, the (long vacant, very badly neglected) house went on the market, a family bought it, and then brought in their contractor to refurb the whole thing from top to bottom, which took 2-3 months. I would definitely want to find a general contractor first- one that knows the area, knows what sort of property you'd need to start with and can show you work similar to what you want to build. Once you have them, you can work with a real estate agent to find the property you need. YMMV.
posted by ThePinkSuperhero at 12:30 PM on February 26, 2018

My (limited) experience with construction loans is that they're only available for vacant lots -- the people who wanted to buy our teardown had to pay cash because they couldn't finance it (bank wouldn't do a conventional loan with the building in the condition it was in, and wouldn't do the construction loan with the building in place).

I have also looked into the cost to do a teardown/rebuild (on the property mentioned above) but it was just so much more expensive than buying something that already existed (which is why we ended up selling). Like, the most basic single-story 1500sf ranch house with contractor-grade finish and appliances would still be upwards of $100K.

I would start by talking to lenders about what you can and can't do with particular loan products, and talking to a local builder/contractor about ballparking the costs of what you have in mind.
posted by rabbitrabbit at 12:42 PM on February 26, 2018

I did a teardown and rebuild, though i didn't intend to initially. Short story, we bought a rundown house that we got cheap and expected to renovate it. After having an engineer look at it we decided it wasn't worth it to fix it up so we decided to rebuild. Unlike you, we already had the property when we decided to do this.

A lot of things really depend on the area. My advice to you would be to talk to a local architect. She can give you an idea of what something might cost (though keep in mind estimates can swing wildly from one contractor to another) and/or where you might want to look.

One thing to keep in mind is that once you tear down a house now you're dealing with "new construction." and you're now following the laws for new construction. So maybe you bought a small four bedroom house but if you build new on the lot you're only allowed to build a two bedroom because of some zoning restriction that came up in the last yen years. If you renovated that four bedroom you might not be subject to it but if you're building new, you are. This is just an example of the sort of thing you might have to deal with and it's not far from a similar issue I had to deal with.

So my point is find out about zoning laws and issues in whatever town you plan on building in before you buy something. Trouble is the town people might not want to talk to you until you have building plans in place. Also the person you talk to might not know all the laws since each town department sort of has their own rules. The planning department was totally fine with my plans but the guy at the Board of Health had some issues with it. We also had to get a variance due to my lot shape, something that never came up when we scoured all the many zoning by-laws.

Try to narrow down where you want to live. Talk to people in that town. Talk to people who have built. Talk to architects. Attend a couple of Zoning board of appeals meetings just to get the lay of the land. Read the laws. Do your homework. Don't assume you can build anything on any lot.

I focus on this stuff because I was bitten by it. It all worked out in the end, after many delays and compromises. The fact that you want to build something modest should help you, though I was building somewhat modest as well.
posted by bondcliff at 1:38 PM on February 26, 2018 [1 favorite]

Most people need to borrow the capital to refinance the buy and rebuild. (Canadian) Banks pretty much won't do that, not on a schedule that works for paying builders, so future homeowners need to look at alternate capital sources. There exist in my neck of the woods "custom builders" who essentially self-finance the build, then turn over the completed inspected build, with all permits to a mortgage institution at the end of the process. How much and how often the future owner pays the builder needs to be worked out between the parties. There are certainly custom builders who specialize in infills and teardowns either on spec or for clients.

I'd find a realtor and communicate this with them.

I'd look for a custom builder/general contractor who is sufficiently financed to be able to take on a project like this.

I'd want my own architect who can work with the builder. You don't want the builder to be your architect.

You can do this in any order, but you need all three. I'd start by going to architects who do stuff you like, at the scale you like, and see who they can recommend as builders.

This will cost way more than just buying a home and renovating. It will cost more than getting a new house built on an empty lot. It will take longer than you think, particularly permitting and inspection. But a good builder and architect can take on much of those burdens for you, facilitate the project and work to a schedule. Taking on one of the three major roles yourself is extremely hard.
posted by bonehead at 1:41 PM on February 26, 2018

If you were in my market, I'd suggest researching the local design/build firms to find one whose work you like. Then I'd go to them with a budget and have them help you pick a house. Firms like this here tend to really know the housing stock they work with and would be able to guide you intelligently. The ones I know locally are pretty active on Instagram and Houzz and also heavily involved in the local design community.
posted by mullacc at 3:09 PM on February 26, 2018 [2 favorites]

In my neighborhood there is a block of very modest post-war single story houses. The area is actually zoned such that multi-family houses can be built without going before a zoning board, as it does not require a variance, and thus flies under the radar of the neighborhood civic association. Guess what - at least half of the smaller houses have been sold to developers and torn down and the block looks like hell, uncoordinated and with very little attention paid to fitting in, since the builders are organized to buy, tear down, build and flip. But there is little we can do because of the zoning and the pressure on the mostly older owners who have lived in these small houses for decades. So gentrification has many unintended consequences. This same thing has happened all along the New Jersey shore, as modest bungalows are bought up and developers build massive multi-story structures utilizing maximum square footage on the lots. It has really changed the atmosphere of the communities affected.

If you're looking for a suburb it might be slightly different, but do check into zoning. It is rare that a better-than dilapidated building will be attractive to tear down financially. And as others have pointed out financing such a project is very challenging to a family, as opposed to a deep-pockets builder. If you decide to go forward, I'd start with an architect to get an idea of what you want to build, and then search for a spot to buy that fits your needs. You can eliminate a lot of fruitless searching that way, and architect's fees, as you consider possible locations.
posted by citygirl at 3:20 PM on February 26, 2018

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