Strategy for existing home

[Teck Kang]

The only house I bought to live in will be fully owned by the end of 2024. 

Some facts of the house:

Location: Nassau County, NY, Town of Hempstead

Year built:1929

Purchase price: 290,000 in 2013

Condition: Average

Lot size sqft: 5000

Livable sqft: 760

I'm seeing several houses in my zip code that have been demolished and rebuilt into new houses with the maximum allowable livable square footage selling between $1.0M- 1.2M.

Which is a better option taking into consideration, profit and capital gain tax (assuming my household income of 80K)

1) Should I sell this house as is at $450K

2) Demolish this house and rebuild it without taking out a loan. Sell for $1M. 

[Abel Curiel]

Quote from @Teck Kang:

The only house I bought to live in will be fully owned by the end of 2024. 

Some facts of the house:

Location: Nassau County, NY, Town of Hempstead

Year built:1929

Purchase price: 290,000 in 2013

Condition: Average

Lot size sqft: 5000

Livable sqft: 760

I'm seeing several houses in my zip code that have been demolished and rebuilt into new houses with the maximum allowable livable square footage selling between $1.0M- 1.2M.

Which is a better option taking into consideration, profit and capital gain tax (assuming my household income of 80K)

1) Should I sell this house as is at $450K

2) Demolish this house and rebuild it without taking out a loan. Sell for $1M. 

 Hello Teck,

The numbers could potentially work depending largely on your expenses to demolish and construct. From the information you've shared here, seems as though option 1 would be your best bet.

You should consult an architect and run a more in-depth analysis on the construction costs if you're seriously considering rebuilding.

The cost of demolition and construction on this could be north of $600K. Just throwing some rough #s on this, if you wanted to build a 1,500 sq ft home and it costs you $350/sf to build it, you're at $525K. 

Factor in about 10% of the sale price to go towards closing costs (transfer taxes, commissions, attorney fee, etc) and miscellaneous expenses and you're at $625K so far - this is NOT including demolition costs, holding costs (taxes, utilities, insurance, management, etc), architectural drawings, surveys, building department filing fees, etc.

That said, you may also want to consider the costs and potential benefits of adding sq ft. to the existing home and/or updating the home to potentially boost your sale price.

All the best!

Abel