Complete tear down and rebulid for my first?

14 Replies

Hello,

I am still new to REI and would like to do my first deal soon. I have a family member who has a single family home and has not lived in it for over a year, for a very good price. There are a lot of problems with the property from years of neglect. The property is large (for the location) and is in a great location in the town.

My idea would be to tear down the existing SF structure and have a multi-family home built in its place. Would this be a good idea for someone who is brand new to REI? What would be the best way to approach this situation? I would like advice and criticism from everyone, so please fire away.

Why not convert it? It would have to be amazing for me to demo the entire thing.

@Kyle Penland

That could be a possibility. I don't really know much about the process or if it would be a better idea to convert or demo, I would need to get a local contractor to determine that. The water main broke and flooded the entire basement and was never properly taken care of so I don't know if that would compromise the integrity of the structure.

Originally posted by @David Pickard :

@Kyle Penland

 I don't really know much about the process or if it would be a better idea to convert or demo, I would need to get a local contractor to determine that. 

It sounds as though you may be getting in over your head.  You cannot rely on a contractor to provide sufficiently accurate and thorough information on a core decision.

@William W.

Yes and that is what I am trying to avoid, getting in over my head. But I am looking at multiple strategies as far as this property in concerned. I was just wondering if anyone thought it would be a sound decision to tear down and rebuild a new multi family on the land. There is a multi-family directly across the street that was built about 10 years ago in place of an old single family house, this is where I got the idea from.   

Without information there is no way to determine whether it is a sound decision.

@David Pickard

  put it on the market and see what a builder would pay for it... then back into whether its a deal or not.  most likely as stated a bit of biting off a little more than you can chew for a first project..

for me... if its a totally heaving gut job and such I would rather find a lot a build a new home.. at least I can control my cost somewhat  :)

Medium ksqoekox 400x400Jay Hinrichs, TurnKey-Reviews.com | Podcast Guest on Show #222

@Jay Hinrichs

 Thank you. I will look into that. I was also considering a fix and flip. I could get the house for under $90k and the median list price in the area according to redfin is $424k. I just don't know how extensive and costly the rehab would be for the house.

at those price points it could easily make sense to demo and rebuild.

check with city planning though to see if you can build multi unit .. it may only be zoned for SFR.

Medium ksqoekox 400x400Jay Hinrichs, TurnKey-Reviews.com | Podcast Guest on Show #222

@Jay Hinrichs

Thank you again. That's why I was asking. The home is owned by and elder family member of mine who cant take care of it anymore and just wants to get rid of it. And I see this as a great opportunity for me to break into REI. I was trying to get opinions on if it would be a better idea to flip or build a multi-family on the property and do the whole house hacking bit. I will take a trip over to the city planning this week.

I have done that several times and I like to do it.  However it must be in a good or better location.

Suggest you talk to an architect  . Will be free or very inexpensive. He will answer all your questions and then you will know what is going on. You might even find it is cheaper to have him direct and guide you in the building of the first one. It will be cheap education.

If its a large lot , look to see if it can be subdivided , if so build more than 1 house 

NA Jayy

Thank you for that information. I will get in touch with an architect. The location is good. The house is in a very nice neighborhood outside of NYC.

Originally posted by @David Pickard :

Hello,

I am still new to REI and would like to do my first deal soon. I have a family member who has a single family home and has not lived in it for over a year, for a very good price. There are a lot of problems with the property from years of neglect. The property is large (for the location) and is in a great location in the town.

 I recently wholesaled a property meant to be torn down because I thought I wouldn't be able to handle the job. The investor who bought it did a few smart yet simple things and I encourage you to explore this opportunity before giving it away.

1. Try to look for new constructions in this neighborhood; talk to the contractors, get an idea of price per sqft, what is the target price, floor plan drawings. 

2. Talk to the city's planning department and ask as many questions regarding their guidelines to building in that area, if they will allow rezoning, subdividing, what is the setback, fees for each scenario etc.

3. Find a broker that works the neighborhood and had at least 10 listings since the beginning of the year. These guys know best about what are the local trends, and may even have buyers who are actively looking for a house. 

4. Try a creative finance approach to purchase the property. If you can get seller finance that will significantly increase your chances of seeing this through

@Assaf Furman

Great pointers, thank you. I definitely don't plan on giving it away, but I will have to find some way to creatively finance this deal.