Demolition Dollars

Physician's Money Digest, December15 2004, Volume 11, Issue 23


Michael Sheehan

Buy a house and knock it down.Some buyers do it for profit, and othersso that they can have the house of theirdreams. According to the National Associationof Home Builders, every yearabout 50,000 US homebuyers take thewrecking ball to a house they just boughtso that they can build anew. As the realestate market loses some steam, however,demolition and rebuilding may not makeas much financial sense. According toreal estate mavens, you have to makesure the potential selling price of thenewly built house will cover your purchaseprice plus the cost to tear down theold house and rebuild. Figure in a 10%to 20% profit, too. Check local zoninglaws. The existing house may havebeen grandfathered from compliancewith zoning codes that will apply to thenew home.—