Tear Downs vs Gut Rehabs

[Joel Falk]

I recently listened to an older podcast with Gabe Dasilva (episode 258). Gabe’s business model is to take tired Cape Cods, ranch homes, etc. and basically add a level to them to double the square footage. He also moves walls, etc. to make a more modern floorplan, and in many cases he does additions as well. The work looks top notch, and he is growing the business and seems to be doing well—kudos to him!

My question to the forum is this: if you are ripping most of a house to the studs, are you really saving any money by not just demo’ing the whole place and starting from scratch? Seems like if you are working from an existing structure, you might save a bit on the ground floor exterior framing, most of the foundation, and that’s about it. I’d further expect that there would be in many cases extensive foundation work needed if an expansion is planned or if you wanted to finish the basement. So what am I missing here? What is the benefit of the rehab/remake vs. a tear-down?