Thoughts on renovate vs. rebuild?

[PrincessoftheCape]

Originally Posted by audemars

The house was a classic colonial built in the 1960s.

Not worth saving, then. Not unless you're really attached to it. There are too many legit Colonials in New England to worry over a copy. And a 1960s copy at that.

If you want to tear it down, and really do believe that rebuilding will wind up being the right financial call, go for it. I was just worried you were going to be tearing down something from 1790 or 1850 or something. But 1960? Pff. Go for it.

[MikePRU]

Originally Posted by audemars

Good thoughts, appreciate them all. The house was a classic colonial built in the 1960s. Ceilings for most of the home are right at the 8ft mark, with no central air, updated kitchen or other modern amenities . Math basically comes down to renovating for ~400k, or rebuilding for a paper gain of ~1.5mm based on recent comp sales, which wouldn't be realized for decades and in the interim incur heating & cooling increases plus higher taxes and upkeep. Leaning toward renovating for the short term to suit current needs and revisiting in ten years or so. Appreciate the input.

Are the other homes on your street that have been torn down colonials as well? I don't often see colonials get torn down. Mostly, I see splits, ranches, and capes get torn down. I'd be curious to know what town you're in as well.

[3cents]

You said "Do you renovate for roughly a third of what the home cost you", and you said renovating costs around $400K. Does that mean you bought the house for $1.2 million? And then you said "make a paper gain of 1.5 million" is you rebuild. Does that mean you're hoping to sell it for $1.2+$1.5+$X , where $X is rebuilding costs?

If you did bought the house for $1.2 million, I can see why you're willing to put $400K into renovations.

[AndrewCarnegie]

From my own experience, a large part of the value of your home is your neighborhood. I've also learned that you can make more money in real estate with a pencil than a hammer. I think in your case it sounds like your house will be valued as a tear down regardless of what you do to it so consider any upgrades to be wasted dollars. A little harsh but I think that is a realistic opinion.

[SpringMom3]

i am just curious, what is it that you guys mean by "tear down" how could a house that is renovated to be very nice still be considered a "tear down?" i am thinking you mean something by this that i do not know.

[Beachcomber4]

I'm perplexed by the idea of a $400k reno and a 10 year revisit. What would be done for $400k? What type of appreciation have you seen in your home with all of the new construction? Are the new homes a more custom style and do they make your current home seem out of place? What is the square footage of your home vs others in the neighborhood- specifically those that have been torn down and rebuilt? How much bigger would the home be that you would build on your lot? Lots of questions I know but it's hard to really offer any advice without knowing the lay of the land. Like MikePru I was surprised to hear you are thinking of tearing down a colonial. They usually have good bones and are conducive to reconfiguring a floor plan and/or adding on.

[MikePRU]

Originally Posted by SpringMom3

i am just curious, what is it that you guys mean by "tear down" how could a house that is renovated to be very nice still be considered a "tear down?" i am thinking you mean something by this that i do not know.

Tear downs don't have to be run down little shacks. The only requirement is that the purchase price of the land + the building costs results in a sale price for the new home which will turn a profit for the builder.

[Jthree]

I think I somewhat get what the OP wants to do, and I think it makes sense, not necessarily from a purely-for-profit standpoint, but from a having-a-home-that you'll enjoy standpoint.

I'm renting in Newton, and I see a lot of tear-downs (mostly old ranches) replaced with large, new construction $1-2 million homes. I've also seen a lot of homes with substantial expansions, which I imagine would improve on the cost of the original, if they're done well and improve the livability. Acquaintances of ours are close to finishing an addition that pretty much doubles the size of the original (colonial style) house, allowing for a large kitchen/open living area that seems pretty popular in new construction. Pretty sure they increased the # of bathrooms too. They live in a sought-after neighborhood. I imagine if they ever decide to sell, their home would pretty attractive to buyers b/c (a) of the locations/schools, (b) they now have a larger-than-typical size home for the neighborhood, with a nice living space and a decent # of bathrooms (c) they still have some of the charm/character of the original structure. Will their profit-to-cost ratio be as good as that of a developer who was able to quickly tear down, and then build a McMansion with enough high-end details to attract a Newton buyer while using as many cost-saving options as possible? No idea. I'm sure a lot depends on the choice of finishes, etc. But, they were able to live in their home during the renovation (as far as I know) so I imagine that saved on the costs.

So, OP, if you can renovate the house to your liking, that seems like a reasonable choice. I'm assuming most of the things you want to upgrade (kitchen, adding AC, maybe bathrooms) would appeal to buyers as well, so you should be able to recoup at least a percentage of your costs.

On the other hand, it sounds like you can afford to tear down and rebuild, and that you don't love the old house. In that case, maybe _you_ won't really be happy unless you have new construction, in which case the money for reno isn't really well spent.