Remodel/New Construction Cost NOVA - Fairfax

[William Lunsford]

Hello Everyone,

I am moving to NOVA (Vienna/Burke/Springfield) in the next couple of months and am analyzing the real estate market.  I am debating on a buying at wholesale and remodeling or doing a demo/new build and am curious what new remodel/new construction cost run on average per sq/ft for mid level builds.  I am not looking to build a McMansion or anything crazy.  My primary target is construction that I can sell at an affordable rate in the future or something that I can rent out.  Thanks for any insight.

[Joe Facenda]

I have been a Realtor in Northern Virginia for 27 years and lived in Vienna a little longer than that.  Your strategy is an interesting one that many clients have thought of.  However, the acquisition cost usually is the number that kills the idea for owner occupant builders.  

Know that in the town of Vienna, you will definitely pay north of $525,000 for a lot and more likely closer to or even a little north of $600,000.  In other areas, you may be able to get a lot for a little less but I would think it would be the rare - very rare - single family lot in a desirable area that would go for less than $450,000.  And in those neighborhoods, you may be the first tear down, never a great position to be in if resale is part of the plan,

I do some work with Habitat for Humanity and we have been able to get some lots for under $200,000 but these are not lots that would support a new luxury build.  They are perfect for the starter homes that Habitat builds but would be of no interest to a typical for profit builder.

I am not familiar with specific permitting costs and government fees for a new build but I know the costs in and of themselves are not a deal killer.  I do know that there have been stricter rules and guidelines regarding water runoff and such since much of our ground water eventually impacts the Chesapeake Bay.  Builders I know have now had to add months to their pre construction planning to satisfy all of these requirements.

On the build side, a ballpark - repeat ballpark - number is about $200 per square foot.   I think you could perhaps squeeze by at a slightly lower number but more than likely to get the finishes consistent with a new build, the number will go higher.

And with a new build, you almost have to go something like 3500 sq feet above grade, 4 bedrooms and 3 baths up, finished basement and 2 or 3 car garage.  Not doing so would put you at a competitive disadvantage against all of the new builders who are doing that as it seems to be what the market wants.  Most of the new homes in Vienna are going for 1.3 to 1.6 - a few a little less and a couple a bit more.  It would be nice to build something smaller that came in less than 1 million but the lot costs seem to rule that out.

Also, if we did a rent analysis for these homes, I am almost sure you would not be happy with the ROI. There are exceptions to every rule but I find that anything with a value over $500,000 in our market is not the best return on investment from a rental perspective. You would be better off buying 2 $250,000s than 1 $500,000

So, not knowing anything about your family situation, finances or construction skills, in general, I think a new home would be a tough strategy to work.  Buying a rundown home and fixing it up and adding value  is certainly something that can be done.  It is just on the new construction side, the lot costs are difficult to work around.

Hope this helps