Dynamite and Bulldozers?

Here is an odd twist on the home remodeling project… how about dynamite and bulldozers?

It has recently come to my attention that the property may be worth more if I raze the structure and replace it with a twin-home.  Crazy you say?  I’m actually looking into it.  So far my cost estimates to do it are $315K and the resale value would be $460K to $480K or about $230K to $240K for each dwelling. 

Let’s work with a middle figure of $470K total income from selling both.  Take 6% ($28,200) out of that for real estate commissions minus the $315K demo/construction cost, then another 40% ($50,720) for capital gains and I would be left with about $75K in spendable cash, or about the same amount I’ve taken home in the last 3 1/2 years after taxes from my job.

Maybe I need to make this a career change.  Doing this a couple times a year would certainly free-up money for more philanthropic pursuits.

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7 Responses to “Dynamite and Bulldozers?”

  1. If you do something that daring and it works the way you expect, Fabulous! So many things could go wrong it scares me. still you’ve got the balls to do it and if you do I wish you all the best, Buddy. You could get rich buying fixer uppers and remodeling them yourself and selling them at the price there going for knowadays. What ever you do I’ll be pulling for you.

  2. Ed… I’m laughing on the inside. Those that I want to know do.

    The house this is all about economics in the end. What is the most economically practical use of the land I own? Is it as a single family home or would it be served better by a higher density of development (IE a twin-home).

    When doing stuff like this you don’t go into it without having a resonable expectation of what you’re going to make in the end. It could turn out that the metrics I’m looking at right now do not come out the way I expect in the end. However if they do the tear down and re-build would make more economic sense for my pocketbook in the end as if I remodel the existing structure I’ll be lucky to break-even and if I rebuild I’ll likely make a minimum of $50,000.

    What would you do? *grins*

    Uh-oh, now I’m going to get my preservationist friends after me. I hope they understand that this is reuse of an existing development and better than using raw land. 🙂

  3. How is the zoning in your area? Plus, haven’t you already sunk a good bit of money into the ol’ money pit?

  4. Swampgoddess – I’ve factored in the money I’ve put into the current structure as part of the acquisition costs. That would be out of the $315,000 I mentioned in the post.

    The city might allow it since my goal is to put in something that looks like it belongs in the neighborhood (not a cheap-motel knock off) and to make sure the setbacks from adjacent lots are proper.  The question is if I have to change zoning.  If not, then it’s a simple matter of getting the appropriate permits.  If so, it may sink the idea.  My neighbor across the street has a single family dwelling but it looks like a duplex in that there are two front doors.  So if I put up something that was designed to be what it is from the start it should look good to the planning department.

    In the end what I’m looking at is what the best exit strategy from this property is for me.   I can still do this as a remodel and break-even or do it this way and make some money.

  5. i would say it depends upon the neighborhood. If you’re the first to do it, don’t do it…

  6. The neighborhood is desirable and lacking in the type of construction that I’m wanting to do. I think one issue is that my neighborhood may be in a different school district than the next street to the east. Similar houses over there sell for about 20% more than my area.

  7. Wanta’ come bulldoze my house? 3″ of rain in as many hours equals trauma for ye’ old Swampgoddess. I’ll share more this weekend after Mr. Goddess’s Contractor Friend comes to visit with his long ass ladder. Oh Joy. Oh Brokeness.

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