Total Gut or Tear Down to Rebuild?

Question

Will Barnard · Answer

You don't "HAVE TO", it was just a suggestion assuming you needed funds to do the rehab. You can certainly wait if you have cash funds available to start your project, then apply and get your loan for the balance.

There are many avenues to funding this type project so the options are numerous.

Zimean Vickers · Answer

@Will Barnard Thank you for your help. I'm new at this so I'm not sure what type of loan I need... I just know I would like the lowest interest rate- Any suggestions? Thank you for letting me know I need to apply for my rehab loan before doing any rehab work or demo- I didn't know this. @Lora Salter thanks for the advice I need all I can get. I never heard of SIPs I will look it up on YouTube so I can better understand it. @Jay M. Thanks for the spreadsheet idea- I'm doing it along with getting a couple of contractors out to give me prices. @Jim Adrian sounds like I may not be as bad off as I am assuming... I will keep you all posted. Now I am on the search for contractors

Jim Adrian · Answer

@Zimean Vickers

If you don't have any structural failures then it should be savable unless you really really want to tear it down.  Then it becomes a numbers games like others have said.  It seems you are pulling numbers from the sky with no merit (assuming I'm wrong here).  It looks like you are saving the foundation, structural framing, electrical, site demo and prep work and those are big ticket items.  Take some time and make list of repair work that needs to be done to each room.  I would do this in excel so you can add quantities and cost to it.  This will also create your vision or plan of work for this project.   For some rough numbers (and I mean rough)  use $30 per sf  (of floor area)for each room to get new paint and flooring.  Use kitchen and bathroom spaces at $75 per sf of floor area,  Exterior walls and roof use $10 per sf per wall area.  Add in numbers for hvac, plumbing, dumpster rental, utility bills (water and power) etc.  When you get your list complete at 25% contingency.  If you self preform work then these numbers may be less.  You will need to see how these cost work for you area.  You really need to have a contractor come out and look at the place.

Jay M. · Answer

The items you listed that it needed is not as much as a rebuild.  Even if it is only as serious as you described and not worse then I would look at a tear down as an option only if  the cost supports it.  If you bought it for 60 and vacant lots are going for 70+ then look at it.  If you're into it for 60 and lots are going for 60 then you're in the red already because it will cost you $X to tear down and remove it.

In my area teardowns are popular because of the lack of land and for the most part the neighborhoods usually maintain or improve rather than degrade.  When you live near the ocean they usually don't let it go to heck....

Lora Salter · Answer

How about doing a rebuild with SIPs (structured insulated panels)?

Will Barnard · Answer

Not sure what type of loan you intend to apply for as you did not mention that info so the answer can vary. I would start applying for your rehab loan before you do any work or demo, generally speaking of course.

Jim Adrian · Answer

Define what makes this uninhabitable?  This can vary widely.  Just gutting the place will save you 25% alone on the structure and demo cost.  If the structural framing is bad / rotten then determine how much of it is.  This will determine if you should tear down the building.   Get a contractor to come out and look at it with you.

Will Barnard · Answer

Due to the fact that you intend to hold as opposed to flip, the answer will be different in some cases and without more details, answering this question is going to be more a generalization so keep that in mind. A complete tear down would likely be the last resort as it is the most expensive and most time consuming, therefore, I would gut and put back together saving all you can that remains usable.