How much to demo and build a house?

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Onion69420

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So long story short, due to illness, my former mother in law can no longer afford the 2nd home she owns. The place is dilapidated and should have been torn down years ago, but she found someone to rent it from her.
She was mentioning selling it to a developer, I figured why can't the developer be me?
The house is around 1000sqft. Rough estimate, how much should I offer hee? How much to demo? How much to build a smallish 1000sqft house.
Would this be profitable?
 
I had a builder buy a small home cottage near my house a number of years ago. His plan was to “Remodel” the house and live there for a short time and sell it.



I was talking to him and he said he was building a new home on the old foot print but to comply and be grandfather in with utilities and well and septic he needed to leave one tiny corner of the house. He brought in a huge crew and at the end of day one it was down and gone except for a couple blocks and the footer. The foundation was done the next day and a couple days later over one weekend there was a new house standing there totally finished on the outside.



He had about 50 people working on it that weekend and they all were pro crews that owed him favors.



Doing it yourself is a much larger deal as a DIYer.



The home we live in now we bought for 24k two story house that was on the market for 2 years and very distressed on a quarter acre lot in a little NW PA town. Every inch of it inside and most of the outside needed touched. I didn’t tear it down and it took a year of my time weekends and evenings for close to a year. I had an 80 year old guy helping me part time and he was a good builder in his day. I bought everything I could used or at a bargain. My guess is we put between 20-30k into it. We now have a great place to live and mortgage free and its probably worth 120k. Flippers didn’t want to touch it though as their costs would have made it a loss most likely.



You really need to get it cheep and if you are going to sub out the work need to really know your subs and what the costs will be. Location and prices around the location are super big. If it is the worst home in the best location with a housing demand then it might be worth it.
 
I had a builder buy a small home cottage near my house a number of years ago. His plan was to “Remodel” the house and live there for a short time and sell it.



I was talking to him and he said he was building a new home on the old foot print but to comply and be grandfather in with utilities and well and septic he needed to leave one tiny corner of the house. He brought in a huge crew and at the end of day one it was down and gone except for a couple blocks and the footer. The foundation was done the next day and a couple days later over one weekend there was a new house standing there totally finished on the outside.



He had about 50 people working on it that weekend and they all were pro crews that owed him favors.



Doing it yourself is a much larger deal as a DIYer.



The home we live in now we bought for 24k two story house that was on the market for 2 years and very distressed on a quarter acre lot in a little NW PA town. Every inch
I had a builder buy a small home cottage near my house a number of years ago. His plan was to “Remodel” the house and live there for a short time and sell it.



I was talking to him and he said he was building a new home on the old foot print but to comply and be grandfather in with utilities and well and septic he needed to leave one tiny corner of the house. He brought in a huge crew and at the end of day one it was down and gone except for a couple blocks and the footer. The foundation was done the next day and a couple days later over one weekend there was a new house standing there totally finished on the outside.



He had about 50 people working on it that weekend and they all were pro crews that owed him favors.



Doing it yourself is a much larger deal as a DIYer.



The home we live in now we bought for 24k two story house that was on the market for 2 years and very distressed on a quarter acre lot in a little NW PA town. Every inch of it inside and most of the outside needed touched. I didn’t tear it down and it took a year of my time weekends and evenings for close to a year. I had an 80 year old guy helping me part time and he was a good builder in his day. I bought everything I could used or at a bargain. My guess is we put between 20-30k into it. We now have a great place to live and mortgage free and its probably worth 120k. Flippers didn’t want to touch it though as their costs would have made it a loss most likely.



You really need to get it cheep and if you are going to sub out the work need to really know your subs and what the costs will be. Location and prices around the location are super big. If it is the worst home in the best location with a housing demand then it might be worth it.
Well, the house is in a decent area. It's just a couple blocks from a lake. There are new houses going up on a street where a developer bought a bunch of land that once had a school. Small houses in that neighborhood go for around 2-250k...tho the ones being built are going foe around 450k(2000sqft)
 
Each municipality will have ordinances governing each, remodel and new, so ask.

You'll find you have days of research ahead of you, spend it wisely.
 
In that case if you have the money to float the deal for say a year then the flip might be a good idea. If you have to borrow the money then you need to factor in the cost to buy, cost to build / rebuild, and the cost of carrying the loans until time of a sale.



The thing is if someone was renting it then it is livable and someone might come along and offer her an ok price just to get in the neighborhood and figure they could fix it up a little at a time. A flipper will need to buy it cheap and do it fast.



In the case of my house we were able to move in within a month and barely call it livable but at that point it was free living and we could take our time fixing it up over a year. There were no payments or interest. So it really wasn’t a flip.



The other thing about an upscale area and low cost flip is the people who will be looking there are mostly expecting a upscale home so the outlay may be on the high side but so will the profits. I think that’s why all the flipping TV shows are out on the west coast. Big differential profits.
 
You asked, Onion69420, how much to offer for the house. You will need to study comparable listings of houses in similar condition in the exact same area. I saw Michigan on your name tile. Michigan varies so much, it's important to compare city-by-city, neighborhood-by-neighborhood.

To pick an example, a house in my old neighborhood that would sell for $150,000.00 would sell for maybe 6,000.00 if it were moved to the neighborhood 6 blocks away. That's a $144,000.00 difference, so compare carefully. The same house in small town mid-Michigan might sell for $50,000.00. In one of the Grosse Pointes, maybe a million or more.

To learn about rehabbing & flipping without taking on a huge project, perhaps consider Rent-To-Own.

You will fix it up enough to meet rental dwelling requirements, get experience in dealing with some inspectors, permit offices, etc. You will pay costs to fix & learn about material pricing. This is a much smaller project than a complete rehabilitation.

This gives you a bunch of mini-experiences so you can learn. Then market it as Rent-To-Own. You get income, renters who are future owners tend to take good care of houses and you end up selling it in the end.

What ever you choose, I'm sure you will do the job well & learn a lot. Most importantly, be certain to have fun doing it!
Paul
 
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