Tear Downs vs Gut Rehabs

6 Replies

I recently listened to an older podcast with Gabe Dasilva (episode 258). Gabe’s business model is to take tired Cape Cods, ranch homes, etc. and basically add a level to them to double the square footage. He also moves walls, etc. to make a more modern floorplan, and in many cases he does additions as well. The work looks top notch, and he is growing the business and seems to be doing well—kudos to him!

My question to the forum is this: if you are ripping most of a house to the studs, are you really saving any money by not just demo’ing the whole place and starting from scratch? Seems like if you are working from an existing structure, you might save a bit on the ground floor exterior framing, most of the foundation, and that’s about it. I’d further expect that there would be in many cases extensive foundation work needed if an expansion is planned or if you wanted to finish the basement. So what am I missing here? What is the benefit of the rehab/remake vs. a tear-down?  

In many markets the cost of keeping the structure and rehabbing outweighs the cost of new construction.

@Joel Falk I am working on a project right now where we seriously demo'ed and are rehabbing lower building new upper. Things to consider: when you demo you have to get rid of the stuff...dumpsters aren't cheap and if you are dealing with old lead based paint or asbestos you have extra fees. I'm also a tree hugger and prefer to resuse materials when I can. However, I'm currently demo-ing a load bearing wall because it is over 2 inches out of alignment and the labor costs to twerk around this are greater than the materials cost to just get rid of it and start over. In addition, permit costs where I am are cheaper for a rehab. Ripping to the studs is way cheaper than starting over. Lumber costs are great and framers don't come cheap. I would always try to save what is reasonable to work with and work around. 

Thanks @Teri S. ! Would love to hear more info on your projects! How do you estimate costs on your projects and how close have you been ending up once complete?

Speak to the building engineers and inspectors as well. They may treat a gut renovation with an addition much different than a level and new build. This could add substantial cost to a project.

@Joel Falk & @Brian Pulaski because I used an existing foundation I did have to have an engineer assess it as part of the permit process. To answer your question Joel, mostly I do okay on my estimates (there is always something unexpected). This particular project has had more than its share of surprises and may not make me much. But I am getting a huge education and am working with some new subs that I like a lot... By carefully segregating my bookkeeping numbers I will have a much better idea moving forward on how to estimate something this complex. Here are a couple photos - the old "underground house" and the new house going on top...

@Joel Falk in most cases it would depend on the market you’re in. Here in Florida, most of the properties are built with cinder block and stand the test of time and weather fairly well as they were designed to do. Also, you face additional demolition permits to take down an entire structure as well as different plan requirements for a new build as opposed to a rehab. I’m not sure if it’s still the same today, but years ago when I did a couple of houses in Los Angeles, as long as you kept a portion of the original house, it would be considered a renovation and not new construction. That kept permit fees lower and you could demo a large portion of the structure.