New house over an old foundation - please explain

[Kate J.]

Hello Everyone! 

I saw in Chicagoland area that people are buying small houses and build over several floors. I wonder what are the potential profits from those? I saw it mostly in the north subs. For example, they purchase house for 250, tier down a roof and build over 2 more floors with new siding and finished basement, then sell for 800k or more. I wonder if any of you did this before and what are the actual profits? 

It seems as a good idea, since there is not much of land and it is not cheap when the land sells without a construction on it. I would jump into this kind of thing, but also how does one finds a contractor who would be willing to take such a project. Speaking of the buyer's side, wouldn't it raise problems that the foundation is very old?

[Khaled Helmi]

We're doing a similar project in DC though we're only adding sqft to the top floor by flattening & extending the roof.  Not exactly the same but similar.

To do something like that you're going to probably need to work with an architect and definitely get the approvals from your local county.  For us it was a bit of back and forth between the architect and county, but in the end we got it approved and our doing the work right now.

The biggest problem so far that we've encountered is the time it takes to get the approvals and do the architectural drawings (at least tell him what to do).  If you're going to do a project like this, make sure the profits are worth the additional costs because your timeframe will be MUCH longer (at least in my experience).  For us we're looking to add 100-150k to the value by doing the work we're doing and i'm not sure it'll be worth it in the end.

Hope that helps!