Plenty of homebuyers dream of building a new home from the ground up. But first they must acquire a plot of land! To realize this real estate goal, might it therefore be a good idea to purchase a property just to demolish it and start from scratch on the same lot?
In many cases, yes! Nevertheless, several factors must be considered before a final decision is made.
Which Are the Advantages of Carrying Out Such a Project?
The majority of “buy to demolish” real estate transactions are undertaken by companies and contractors as an investment. In certain situations, however, individuals may be interested in pursuing this type of project. Why? Because, for some homeowners, it can offer several benefits.
1. It’s Less Expensive Than Renovating
This type of real estate transaction consists in purchasing a residence to acquire the plot of land it is built on. Usually, a house bought in view of demolishing it is in an unsanitary, dilapidated, dangerous condition and would need to be extensively refurbished in order to be safely habitable. In this case, tearing down the property is less expensive than renovating it.
On occasion, the residence may not be a lost cause, but the new homeowners will still have it taken down simply because they have a large budget and want to build their dream home.
2. You Can Close the Deal Faster
When the buyers have already made the decision to tear down the house they purchase, the transaction can be fast-tracked as a presale inspection is unnecessary. Flippers, contractors, and construction companies are particularly adept at securing such real estate opportunities. Private individuals who want to embark on such an adventure have to act quickly to snap up a suitable property as few of them come on the market.
3. You Can Get a Custom Home
Because the cost of a large-scale renovation can be prohibitive, homeowners rarely take on dilapidated properties. But demolishing and then rebuilding offers the new owners the possibility of tailoring the residence to their tastes and needs, from choosing the floor plan to all the new materials. Furthermore, the electrical wiring, ventilation system and plumbing can all be reinstalled according to the latest environmental and building safety standards. Which is also good for the budget!
4. You Can Move Into a Very Desirable Neighbourhood
You may decide to acquire a property that you dislike and so plan to tear down because it is in your ideal location, such as a sought-after neighbourhood or on a waterfront lot. Some municipalities no longer have any buildable land within their limits and so buyers have no choice but to turn to an existing home. In which case, the plot’s high value is not to be overlooked.
How Much Does Pulling Down a House Cost?
Demolition work, calculated per square foot, can cost between $6,000 and $25,000. The expense of rebuilding will then have to be budgeted for, which will vary based on the size of the project and the materials selected.
Other Points to Consider
Planning the project’s timescale is likewise not to be neglected. Your municipality must deliver the required demolition, then building permits to you before the start of the project. Can you wait weeks or months to obtain the necessary paperwork?
You might have difficulty, moreover, finding a contractor and architect that can head you project right away as their services may by in high demand in your area. You will also want to secure adequate financing prior to submitting a purchase offer, to ensure you have enough to cover the mortgage, line of credit or other loan required to realize your real estate dream.
Would you be interested in undertaking a project of this scale?