Real Estate

Bungalow Teardown vs. Buying already built?

  • Last Updated:
  • Jul 13th, 2020 1:13 pm
[OP]
Jr. Member
Nov 23, 2014
172 posts
39 upvotes
East York, ON

Bungalow Teardown vs. Buying already built?

Does anyone have a detailed pros and cons about buying a bungalow in north york, tearing it down, and building up a new one? Is there money to be made and saved by doing this or is it purely for customization value? Just trying to see if anyone has done any detailed analysis on what the pros and cons are. I've been told building a new one is a lot of work and time and may just result in same price as buying one already built and being sold.


Edit: Buy a bungalow, tear it down and then build as large as possible 2/3 story
Last edited by oldspice on Jul 10th, 2020 4:04 pm, edited 1 time in total.
9 replies
Member
Dec 12, 2011
203 posts
224 upvotes
Toronto
Sorry man, nobody tears down a bungalow to build another bungalow. Are you trying to build a new 2 storey? Lots of people buy a bungalow, then add a second storey addition (Google modular homes), or add the addition to the bungalow that they already own. Its gonna be much cheaper to buy the house that you want, then buy a bungalow to tear it down and build a brand new house. It's definitely cheaper to add a second storey to a bungalow then to build a custom 2 storey.
Deal Guru
Feb 9, 2009
12368 posts
11266 upvotes
If it’s a huge lot tear it down and re build... the value will also skyrocket so you will make it back on resale value.

But pick a good and high demand area with good schools.
Member
Jun 6, 2014
300 posts
129 upvotes
Toronto, ON
The difference is cash on hand. If you buy a new house you can pay a down payment and mortgage the rest.
If you buy a teardown, you need the cash to pay for the build. Cash can come from a HELOC.
There's also the time to build. Let's say it takes one year to build. Where are you going to live in the meantime? Do you need to sell your current house to pay for the new property? Can you hold two properties while building, or are you going to rent?
[OP]
Jr. Member
Nov 23, 2014
172 posts
39 upvotes
East York, ON
Assuming there is plenty of cash on hand and time available. Does the economics make sense to do it or is it simply to get a customized house the way you want?

I’m hearing it comes to about 300-350 a sq ft to build and you would build about 4,000 sq foot. I guess you can take estimated selling price less this amount (4000*350) and you need to purchase less than this?
Member
Jun 6, 2014
300 posts
129 upvotes
Toronto, ON
If you believe that cost to build is the same as the cost to buy, and you have the money, then it's customization.

Because now your question is going back to which costs less. Which is a whole different conversation.
Newbie
Jun 12, 2017
37 posts
45 upvotes
location, location, location. You can make any change to a house but you will not be able to change the location. If the location is desirable and the reconstruction costs are kept manageable you will not have a problem reselling.
Member
Jul 19, 2018
294 posts
183 upvotes
Mississauga
oldspice wrote: Assuming there is plenty of cash on hand and time available. Does the economics make sense to do it or is it simply to get a customized house the way you want?

I’m hearing it comes to about 300-350 a sq ft to build and you would build about 4,000 sq foot. I guess you can take estimated selling price less this amount (4000*350) and you need to purchase less than this?
It would make sense to build new based on the above statement. It will definitely come out cheaper than buy a new custom home which would have profit already factored in to the price.
Deal Addict
Sep 12, 2006
1503 posts
438 upvotes
The economics would make sense if you can do a part of the project yourself to save costs. Ie. if you want to manage the construction yourself without a custom home builder, or if you are a realtor and can save on transaction costs, or if you are a labourer and can do a part of the build-out yourself. Or if you want to pay the labourers in cash Winking Face.

Otherwise, it's a wash with existing resale in the same area, and you're paying for the customization, while taking on a risk.
Deal Addict
Mar 2, 2017
3217 posts
6164 upvotes
Toronto/Markham
It depends on who built the home and how the home was built.

Buying new builds can be a great gain for the right buyers if it was over built and lacks some common things because the builder is inexperienced resulting in selling below market (for example they screwed up the ceilings, bedrooms too small, etc). You can get a house at cost or less than it would cost you to do.

On the flipside you can inherit someone else's shoddy craftsmanship while paying them a profit for the privilege.

For me personally I'd rather buy as is and build myself. This is entirely dependent on your cash position, risk, and your abilities...that said buying and building is out of question for most. It's also a pretty difficult task that most people don't appreciate or understand the risks of. If you think it's as easy as hiring a good builder, closing your eyes, and in 12 months you have a new home you are in for a rude awakening lol
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