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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!
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.
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.
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!
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.
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.
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.
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
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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