In article ,
"Dan" wrote:

This may not be the best NG for this, but I'm sure there are people here who
have some ideas on the topic. My wife & I are moving to LA. The housing
costs out there have gone up about 25% annually in the last few years and
are absolutely insane. We've looked at any number of 50-60 year old 1200
sq' wrecks in "OK" neighborhoods which have not had so much as a coat of
paint since the owners bought them right after WWII, with people LINING UP
to pay $800,000 for the privilege of gutting them & starting over. Since I
want to consider all possible options, I'm thinking about buying a house in
tear down condition & rebuilding on the lot. Surprisingly, such houses do
appear fairly regularly in desirable neighborhoods, usually 50-80 year old
small homes on decent sized lots. Even this isn't cheap, but again I want
to cover all the bases. So I'm wondering what exactly the process would be.
Say we buy a lot & tear down the existing house, what segment of the
building industry would we approach to build our new home? I'm guessing you
can do anything from retaining an architect to design a one-off masterpiece
(not in our price range) to selecting some builder who has a number of "off
the rack" designs suitable for your needs & budget, probably with some
customizing possibilities ("trim levels" if we were talking cars). For this
latter approach, do you select a "general contractor" who then lines up
framing people, drywall, plumbing/electrical etc? Sounds like a nightmare
if you don't get someone reliable. Comments from anyone who has some
experience with this process in general and especially with doing it in the
LA area would be greatly appreciated. We're thinking something in the 2,000
sq' range on a small lot (don't have kids & don't want to have to deal with
too much lawn). Also, what's a ballpark figure for typical suburban home
construction, per sq foot? Lots of variables, I know but just for an idea
with "average level" materials used. At the moment, we're looking at the
Century City/Culver City/Palms/Mar Vista areas, to be closer to work. The
only thing crazier out there than the housing costs is the commute times! We
currently have a nice apartment in the valley (Sherman Oaks) and we like the
area but commuting to our jobs in Beverly Hills & Santa Monica is
horrendous.

TIA

Dan


You'd start with an architect, mainly because the blueprints for the
house are going to have to be approved by the town before they issue a
single permit, and they virtually always require an architect's stamp on
those blueprints. Then you'd have to hire a general contractor to hire
the subcontractors and basically serve as project manager until the day
you move in. There might be some towns that might let you get away with
plans done by a general contractor, but only for smaller-scale
renovations, room additions, adding dormers in the roof, etc. So, once
you put together the cost for the architect, general contractor/project
manager, heavy equipment, materials, sub labor, landscaping, etc. etc.,
you'll know why all those people you see in your area with $800,000 are
lining up to gut all those WW2 homes -- and it ain't because they're all
insane.

But you're only half right -- a bad contractor isn't just a nightmare. A
bad contractor can drive you to financial ruin (or pretty close
to it) and years of becoming more intimate with lawyers and the civil
court system than a reasonably law-abiding citizen could ever imagine.
That's another reason all those people lining up for all those houses
aren't completely off their nut, either. Having a drywaller skip town
with a few hundred bucks of your money you'll never see again isn't as
painful as having an excavator skip town or go bankrupt a week later
with twenty or thirty grand of your money you'll never see again. At
worst, anyone can easily learn to hang their own drywall or mud and tape
quite acceptably to live down that few hundred bucks; but try digging
and carting off all the dirt from a 2,000sqft foundation hole yourself.

Thing is, I think the only way to know *for sure* whether it makes more
sense to rehab a so-called wreck or tear it down and start over is to
get solid bids from contractors, architects, etc., so you can compare
the costs for both. And if it's a hot market, you almost certainly won't
have time for that because that's not something that gets done in a day
or two. Personally, the only time I'd build from scratch is if I had my
eye on some vacant land (which doesn't always sell as quickly as an
existing house), or my house burned down. That's because in fact, what
may appear to be a wreck to the casual observer may actually be quite
salvageable -- and perhaps even for less than you might imagine --
because the structural bones of the house are very solid and
stable. The bones are the only thing that matters in every building;
everything beyond that is pure cosmetics. Granted, cosmetics are always
expensive, but there are times when even the most elaborate cosmetic job
that turns a solid, average home into a breathtaking working-class
palace is cheaper than bulldozing a shack and building just a passably
average, quite unremarkable home. That's why in most neighborhoods,
there's far more value realized by rehabbing instead of bulldozing.

Not only that, but rehabbing an existing home would make more sense in
the short run to an apartment dweller like you. You should check this
out with your CPA, but I would imagine that you'd see a more immediate
payoff not only on your income tax form at the end of the year, but to
your everyday household budget as well. If you bulldozed and built new,
you'd be double-paying living expenses: First to the bank on the
mortgage to pay for bulldozing and building a new house beginning the
day you closed on the loan, and second in the form of the continued
****ing away of your money on apartment rent for anywhere between 6-12
months (or maybe longer) so you'll have a place to live until the new
place is built and passes its inspections. Living in a house that's
being gutted or significantly renovated is certainly no picnic, but
millions of people do it all the time, and they're not ****ing away
money on rent while earning their yearly tax breaks on mortgage interest
paid.

So IMO, you might want to consider the whole matter a little further.

AJS