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Old 10-01-2015, 09:30 AM
 
33 posts, read 50,911 times
Reputation: 14

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We are looking at homes in Westchester within commuting distance to NYC. In some of the closer areas, the housing prices seem relatively high and the available homes on the older side. We are considering the idea of finding a house in the area which has a decent piece of property but is in the lower end of the price range, doing a teardown and building a new home. The idea is that we might pay, in the aggregate, around what the more expensive houses cost, but we will end up with a newer home, with lower maintenance costs, and which better fits our particular needs. In addition, if we don’t build something too extravagant, the appraised value could be lower (despite overall high costs for the project) and we would have a lower tax burden .

Any thoughts on going down this road? Are teardowns too hard to pull off? More expensive than one might think? Taxes higher than one might think? A bad idea compared to just biting the bullet and buying an older home and perhaps renovating? I was hoping we could finance the project as well with a construction loan and a mortgage on the land – am I off base?

Ultimately we will talk to an architect and lawyer, but I value any and all input from the forum! Thanks in advance!
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Old 10-01-2015, 10:38 AM
 
Location: Westchester County, NY
246 posts, read 292,085 times
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There is a market premium for new homes. You can definitely get the nicer house that you want (you'll need to be persistent and patient), but you won't be able to avoid the higher valuation. It will be higher than you think.
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Old 10-01-2015, 01:13 PM
 
Location: Westchester County, NY -> Pinellas County, FL -> Dutchess County, NY -> Denver?
348 posts, read 457,012 times
Reputation: 348
You can't beat taxes in Westchester County unless you move to a different area. Tax burden will be equally high or higher on a new house.

What's your budget?
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Old 10-01-2015, 01:25 PM
 
221 posts, read 481,886 times
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I think it's a great idea, I just can't think of many areas in southern Westchester where a tear-down would work. Old and dilapidated houses are hard to come by in the prime areas and the ones that are available are usually nice homes they just need a complete renovation. There's not many eyesores in Scarsdale.
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Old 10-01-2015, 01:47 PM
 
33 posts, read 50,911 times
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I see houses that look okay, but are older, in the $800K - $900K range. We are looking in the rivertowns, not scarsdale. My thinking was that I could find a small house in the $600K range, negotiate down to the $500K range, and tear it down just to get the property. Then if I can build for $450K I come out around $950K total, which is more than I wanted, but: (i) it's new, which is nice in and of itself but also saves on maintenance for quite some time; (ii) meets our specific needs by building features we want while dropping out features we don't want, and (iii) maybe still is okay re taxes if we build modestly, e.g. 3 bedrooms instead of 4, no granite kitchen countertops, etc... In other words, I suspect that I might spend around $950K overall, but get a house valued at $800K (since it's 3 bedrooms, etc...). In my intended scenario it's big project, and I would be overpaying for the housing, but I would make it back later in reduced maintenance, reduced taxes and the value to us of a custom fit. Am I way off base here? Thanks!
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Old 10-01-2015, 08:16 PM
 
Location: Westchester County, NY
246 posts, read 292,085 times
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Just my experience, but you would need the cooperation of the contractor and a willingness to underrepresent the cost of building. Tax authorities in Westchester often will focus on the all-in cost of building and either use the greater of that or the calculated market value. I can't say how common it is.
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Old 10-02-2015, 05:07 AM
 
1,594 posts, read 3,148,415 times
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The problem is the building costs are kind of static regardless of size of the home and the taxes are high anyway so most people who do this opt to build big.

And no one does a complete tear down. The "teardowns" I see leave a wall standing so as to classify it as a "renovation." I assume it saves on taxes.
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Old 10-02-2015, 06:43 AM
 
1,055 posts, read 1,074,205 times
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Quote:
Originally Posted by ChoicesNYC View Post
I see houses that look okay, but are older, in the $800K - $900K range. We are looking in the rivertowns, not scarsdale. My thinking was that I could find a small house in the $600K range, negotiate down to the $500K range, and tear it down just to get the property. Then if I can build for $450K I come out around $950K total, which is more than I wanted, but: (i) it's new, which is nice in and of itself but also saves on maintenance for quite some time; (ii) meets our specific needs by building features we want while dropping out features we don't want, and (iii) maybe still is okay re taxes if we build modestly, e.g. 3 bedrooms instead of 4, no granite kitchen countertops, etc... In other words, I suspect that I might spend around $950K overall, but get a house valued at $800K (since it's 3 bedrooms, etc...). In my intended scenario it's big project, and I would be overpaying for the housing, but I would make it back later in reduced maintenance, reduced taxes and the value to us of a custom fit. Am I way off base here? Thanks!
Building for $450k is going to be difficult unless you can be yoru own contractor. New construction of single homes go for about $225 to $250 per square foot, depending on the interior build out of course. Assuming you want a 2500 square foot home, even if you did it on the cheap for $200 per square foot, you are looking at $500,000, and that is before furinishing and finishing the decorating. Its not all that cheap. You are pushing the margins to try to buy, tear down and get new for under $1,000,000. You would have to build a smaller home and cheap out on the materials, resulting in the loss of efficiency you want. Also, the taxes would be significantly higher if you built a big new home. I hope you can make it work, but it migh tbe tough. If you need the names of architects, let me know. I can send you a good local one.
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Old 10-02-2015, 08:30 AM
 
12 posts, read 20,529 times
Reputation: 22
So you are going to find a house with a nice piece of land in a good location and negotiate the price down close to 20%, tear down and rebuild a house for less than $200 a sq foot all in? Good luck with that. Not sure where you are planning of looking, but in most of the southern Westchester towns, tear downs that are well located and have plenty of buildable space sell for almost as much as renovated/move in ready older homes. In an area studded with older homes, there is quite a premium put on new construction
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Old 02-14-2016, 07:20 AM
 
7 posts, read 12,166 times
Reputation: 10
Quote:
Originally Posted by ChoicesNYC View Post
We are looking at homes in Westchester within commuting distance to NYC. In some of the closer areas, the housing prices seem relatively high and the available homes on the older side. We are considering the idea of finding a house in the area which has a decent piece of property but is in the lower end of the price range, doing a teardown and building a new home. The idea is that we might pay, in the aggregate, around what the more expensive houses cost, but we will end up with a newer home, with lower maintenance costs, and which better fits our particular needs. In addition, if we don’t build something too extravagant, the appraised value could be lower (despite overall high costs for the project) and we would have a lower tax burden .

Any thoughts on going down this road? Are teardowns too hard to pull off? More expensive than one might think? Taxes higher than one might think? A bad idea compared to just biting the bullet and buying an older home and perhaps renovating? I was hoping we could finance the project as well with a construction loan and a mortgage on the land – am I off base?

Ultimately we will talk to an architect and lawyer, but I value any and all input from the forum! Thanks in advance!
Dear OP - what did you finally end up doing? We just moved to Ardsley, and are contemplating something similar. Will appreciate your insights. Thanks!
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