How much is costing you to scrape a lot and put a new build on?

Question

I am looking at a wholesale deal to scrape a lot and put a new build on. I was curious to hear how much it's costing other investors to have the lot scraped and a how much a new build costs roughly as a $/sq. ft.?

Gilbert Dominguez · Answer

Colin,

Whatever the cost would be to you where you are at will probably be area specific so I would get quotes from local contractors.

You might try driving around your area and see if you can find any ongoing projects similar in nature as to what you have in mind and attempt to have talks with the contractors on site or even the owners if they are available.

One average national cost per square foot is $94.54 and in your area of Colorado Springs maybe in the low $100's lets say $102.00 to $104.00 per square foot. However, nothing beats getting actual quotes from local builders.

If the project you are looking at involves a complete tear down you might also look at what is on the market as far as total prefabs, modular homes as well. You might find they will be far cheaper, pre-engineered, and fast to construct and rent or get on the market for sale.

The thing about tear downs is that while you may get into the property ulta-cheap they will involve an awful lot of time and running around, meetings, permits, engineering etc.

Simply asking what is the price per square foot is like asking how much is a car. It all depends on the quality of materials and amenities you will include, the size of the unit, ceiling height etc. You know, compare apples to apples, price existing properties on the market now so you can compare that to your estimated or calculated cost of new construction.

Just be careful because allot of people make the mistake of thinking because they have new construction that their properties will appraise for and sell for a much higher price. In all my years in real estate I have only found this is a very select few areas and that typically your new construction will not be valued at , appraised at or sold for anything more than the comps in your ares regardless if the comps are on 100 year old houses. Maybe your buyers will be thrilled to have a newly constructed building but the banks and other lenders which will be the mortgage holders will not care and not lend anymore money on your new construction as they will for much older homes. This seems to go against common sense but that is the reality of the situation.

J Scott · Answer

Agreed with Gilbert, but would go even further...

Not only is the cost going to be location dependent, but it's going to depend on a lot of other factors as well:

- Will you hire a builder?  Hire a GC?  GC it yourself?

- What level of finishes?

- What level of contractor?

- What size house? (bigger houses tend to be cheaper per square foot)

- What is the topography of the land?

- Are utility hookups needed?

- Basement?

- What time of year?

Bill S. · Answer

@Colin Smith drive the area and get the number for a couple of GCs doing new builds like you want. Call them and ask them your question. That is the only way to get a real idea of what it costs. If no one is doing what you are thinking of in the area then you can take that as a serious hint that it won't make you money.

Gilbert Dominguez · Answer

I think you may get a good indication from local GC's through a simply Q&A over the phone if that is what you are seeking.

Gilbert Dominguez · Answer

Ok since you know you want to build a 2000 sq. ft SFR. Next question is do you already have the plans. You can of course buy cheap plans online but may have to engineer them to be specific to your site. Will  this involve getting a soil report from a licensed soils engineer so the architect and engineer know what type of foundation they will have to design and the owner have built for the building? Consider grading, drainage, existing and the condition of those existing utilities. Have you checked with your utility company if they can accommodate the needs of your new building? Let us say existing is a 60 amp electric service and your new building will be a 125Amp service or more. Existing 1/2 inch water service but new codes demand a minimum of 3/4" or more service piping. Every detail you can think of has to be accounted for in your construction cost. A good GC will help you determine everything that needs to be accounted for so you will have your plans approved by the city for construction permits. Do not worry the city will definitely let you know if your plan details are complete or not if for any reason you  missed something and have not accounted for it in your cost evaluations (most of the time but not always)

The Questions you have are really better directed directly at the GC's you will be interviewing and getting quotes from.

Assaf Furman · Answer

In my area it'll be $170-$250/sqft depending on the finish level and the contractor.

If you're going to wholesale that tear down, talk to potential developer buyers and ask them how much does it typically costs them.

Colin Smith · Answer

Also, do not include cost of the land.

I'm really just curios to hear what others are paying for just their construction costs on a typical lot.

Colin Smith · Answer

Ok lets make some assumptions.

Assume tap fees are paid as there is an existing house.

What would it cost to demo the lot to start fresh?

What would it cost to build a 2000 sq ft, 2 story with a basement SFR with middle of the road features on a flat lot. Also assume I hire a GC.

Travis Sperr · Answer

The ever confusing question of what it costs to build per square foot. Here is the immediate problem you are going to have in this arena - everyone uses different math it what is costs to build. Hard costs, soft costs, tap fees, actual construction, etc.

I am working on a deal right now we are budgeting $175k per ft - from demo/site work to build to landscaping - all tap fees, engineers, architect, etc. this is for an 8 unit town home development reselling around $400k each.

I see single family construction a little lower - closer to about $125 a ft all in. (everything but land). All depends on price point of the end product and who you are working with.

Chris Simmons · Answer

I have a house that I might do that on in the next few years.  I am looking $5,000 to scrape the site and dispose of debris.  A builder buddy of mine said I could build no frills for $65/ft but his homes typically come out closer to $80/ft.  And that is building only.  You have to add back the value of the land to get the total cost per foot.

How much is costing you to scrape a lot and put a new build on?

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