Tear down vs. Rehab

[Kevin Seith]

I have noticed with a lot of questions I see posted here in BP the answers are usually "it depends" or at least some form of that. To be truthfully honest I am some what expecting the same answer here... but I'd still like to hear everyone's general opinion on the matter. When do you find a complete tear down is better than trying to rehab a property? (I'm specifically speaking about 80+ year old properties) Generally speaking, I feel a rehab will simply clean up a place to make it more desirable to buyers and slightly increase it's value. Where as a tear down will allow you to "create" something new and tailored to the needs and wants of a modern buyer... We often speak about comparables and to try and keep our projects within the same parameters of the other homes within the same area so you don't over (or under) rehab. BUT is it possible to "transform" a neighborhood or community? Increase property values across a neighborhood? So over time, do you think it could be profitable to tailor to the needs and wants of the modern buyer?

[John Moore]

Welcome to the BP family. Tear downs are usually far more costly than a rehab. Rehabbers usually like to find a property that has predictable restoration expense and when finished the comps will provide a profit for a quick flip. A tear down can provide far more challanges, permits, inspections, time and money. The profit spread may be a bit more attractive but obtaining comps might be a challange. The other issue or challange is do you want to build a Spec house or a Custom Home? It is my belief that the rehabbing approach is the quickest route without as many challanges.