You’ve found a property with the ideal view and location. You’re thinking about purchasing the lot, which already includes a house. Before closing the deal, you may be wondering whether it makes sense to forgo renovations and just tear down the structure and start over. And whether the answer to that question will affect your decision to buy. We offer advice on how to approach this scenario.
We’ll also look at a financing option that can be quite beneficial if you decide to start over on your new property.
If you decide to tear down
We have some suggestions before you go ahead with the purchase:
- Will you be rebuilding in a flood zone? If the property is in a flood zone, talk to your insurance provider. If you’re set on the location, a new build could be your best bet. Since the home will have to be built to current building codes, it could even save you money on flood insurance.
- Soil Testing. It is a good idea to get soil testing while you are still in the due diligence period of your contract to purchase the home. Soil testing will provide the information you need to design the foundation of your home. If your home needs pilings, you may be able to negotiate the price with the seller before your due diligence time period ends.
- The cost of tear-down. Most home demolitions in our area range from $8,000-$15,000 on average depending on the size and complexity of the home and whether or not it has a pool that will be filled. But don’t let this keep you from building the home of your dreams. There are a lot of benefits to tearing down an existing home as well. You may be able to avoid the municipalities’ transportation and impact fees that are typically associated with building a new home. In addition, you will typically avoid the fees of bringing in new water and sewer service since those are already on the property. You can also roll a lot of your expenses into one loan, as we’ll see in our next section.
Benefits of a construction-to-permanent loan
If you decide to tear down and build new, the construction-to-permanent loan is favorable to your finances. This plan gives you the funds you need to build your home and then converts your loan into a mortgage.
The loan will cover construction costs, along with the purchase of the lot (if you don’t already own it). Since you can roll the lot into the loan, you don’t have to feel overwhelmed financially by a tear-down project. We’ve worked with some of the lenders that specialize in these types of loans, so we can offer advice on how to proceed.
Rely on LaBram Homes’ insight
Whatever you decide, let LaBram be your guide. We have a long, distinguished track record of quality work and quality advice. Through our blogs, we offer a wide range of advice so that you can build with confidence. This will help in your research before you build. And when you’re ready, so are we. Contact us and let’s talk about your goals. We are the Tampa Bay area’s leading custom home builder, and we love educating first-time home builders and making their dreams come true.