Demo & Rebuild in Cupertino, CA Area

[Siva Singh]

My wife is an interior designer in Silicon Valley. She comes across a bunch of investors who buy old homes, rebuild it and sell. So we are wondering if we can take up that as a business. Here are some initial numbers that I am trying to workout. Let me know if I am missing anything.

Purchase cost of an old house on a 7,000 sq ft lot        - $ 1,800,000

Architect Fees                                                            - $     30,000

Other Soft Fees (like Permits)                                     - $     45,000

Construction (3,000 Sq Ft)                                           - $   700,000

Finance Costs(Borrowing around $1.4 m for 2 years      - $   110,000

as primary residence mortgage)

Selling Costs (5% of $3.3 mil)                                       - $   165,000

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Total Costs                                                                 - $ 2,850,000

Selling Price                                                               - $ 3,300,000

Profit                                                                         - $    450,000

Are these realistic? These will not be realistic if you are from any other part of USA ;) 

Anything that I am missing? Any costs that I can reduce?