Buying old house, demolishing, building new - costs to budget?

3 Replies

Hi all

Potentially considering buying a house in the Bay Area - Santa Clara. It's an older 1950's smaller house 950 sq ft at less than $1m. This post is less about renting/investment as the end game for this house is that I'd like to live there.  I'm considering demolishing the house (pretty old, small and not the design I'm after) and re-building a newer, larger house as the lot size is very big at over 6000 sq ft.

Has anyone gone through such a process?  I'm curious what the challenges/learns are around getting building permits from the city, what to look out for what selecting an architect, how to select a builder etc. I'd like someone/company to own the design and ideally the build end-to-end.  Are there companies out there that do this?

Thanks in advance!


As an architect I’ve worked on well over 30 homes where our clients were in the same situation as you. We found that it did not cost as much to completely tear down and build everything new as opposed to remodeling/addition. Of course this only applies to homes over a certain price point. Usually around a million for the existing home with a new much bigger home being appraised at a few million. This seems to be your situation.

Building a brand new house does require more fees as being a new building. Some times we would keep part of the exiting walls/slabs and call it an extensive remodel/addition but in reality it was practically a new home. We did this to save time on permits and fees. The city will require that a certain percentage be kept in order to pursue this strategy. If this is not possible a new structure has to be designed.


  1. All new mechanical, electrical and plumbing
  2. Sewer, water, utilities are already at the site
  3. Curb cuts are existing
  4. Most importantly you get the design you want.


  1. The permit process will be for a new home. This might require design review board or planning board hearings.
  2. It will cost a little more but not as much as you think. As for time an existing remodel/addition vs. a new home at this scale it is about the same.
  3. All zoning and building codes will have to be adhered to. No grandfathering. If you can keep it as an extensive remodel/addition and call it existing then you might be able to grandfather some items.
  4. You will most likely have to upgrade site conditions. For example, if you have no sidewalk in front of your property you might have to add one.

There are a lot of design build companies out there that have their own Architects. For example, I help a design/build firm our here in DC and also do mine own stuff. However, be careful if you choose a design build firm that does not have a competent Architect. Even though a design build firm sounds good you might be missing out on either a great design or quality craftsmanship. I would suggest hiring an Architect and establishing a design that you really like. Throughout the design process pay a Contractor to provide rough budget estimate so that you know the design is within your budget. Then when it is ready to be bid you have that contractor bid on it as well as 2-3 other contractors. You will get the best price and best design this way.

If you would like more information just ask away in the forum or send me a message. There is a lot to do but it is manageable.  Just make sure you hire a team that has experience in these types of projects. 

Good Luck.

Build cost varies depending on if you’re managing your own subs or hiring a GC. If you manage on your own it’s around $275/sf in Santa Clara for material and labor. If you hire a GC they’d prob charge you $400. Other than the land cost, your soft costs I’d estimate about 20% of your build cost or 25% just to be safe.

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