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When Should I Tear Down My House or Commercial Building?

Updated: May 23, 2022

With how popular Real Estate flipping is becoming we are often called by investors to evaluate properties to decide if they are worthy of a repair while leaving some money on the table or if they have outlived the materials they were made of. More often than not the places we visit are repairable but is it worth the repairs?

We have put together some bullet points to help save you some time and be able to make a decision on your own on these properties.

Reasons why you should demolish your home versus repairing:

1) If Renovation costs are higher than the property would appraise for after the repairs.

Obviously this is the most obvious reason as to why you would tear down a structure instead of repairing it but here are a few signs to know before even calling a contractor:

-Foundation Issues-

This is not only the block/brick work but footers, concrete slabs and sill plates. If it looks like any of these are going to need many repairs this is usually the first sign of a very costly renovation.

-Rotted Floor Joists Around Load Bearing Walls-

If you can visually inspect the homes floor joists around load bearing points and see lots of rot, another sign of costly repairs.

-Smell of Mold or Damp Conditions-

Many times old homes have lost of small leaks that aren't very obvious and with poor ventilation lots of mold can build up behind cladding and be vey costly to repair.

2) If the property would be more valuable as a vacant lot. Many times a structure is actually hindering the value of a prime lot. Pull comps in the area of vacant properties and evaluate your own, would it be worth more vacant or with a repaired structure? Is new development big in your area? A lot of folks may only be looking for vacant land to build on, if your lot is being occupied by dilapidated structures it may not come up in one of these searches.

3) If the dwelling has ever had a meth lab inside it. I know this can be an awkward subject but is very much a concern and needs to be recognized. If a property has ever had a meth lab inside it, living inside there could be very hazardous to the health of you, your family or others inside the home. Also a home that has had a known meth lab inside it should be treated just like a home requiring asbestos abatement. Many states now require the removal of debris to be taken to the proper places just like asbestos and can be extremely costly. A typical title search can often show whether or not this is the case for the structure on your property and is very much worth the time.

4) Is the structure on your lot the most profitable footprint possible? What I mean by this is often a home is located in an awkward location on the property and does not allow any other development or the actual footprint of the structure isn't a great ROI (return on investment) per Square foot. An example of this may be an old home on a large lot that may bring $800-$1200/ month where a duplex could be built which would bring in $1600-$2400/ month. If you don't know the demand for housing in your area call several local realtors and ask for advice.

5) Could the structure on your property be diminishing the value of other properties around it? For instance, property A with a dilapidated home is for sale for $30,000, property B is a nice lot with beautiful updated home for sale for $120,000.00. Well in this situation the owner of property B is going to have trouble getting their asking price or more when a realtor pulls comps in the area and finds property A. If you own Property B it could be the right decision to purchase property A and clean it up.

These are just some of the few reasons why demolishing a structure may be a better idea than renovating. We hope that when evaluating properties this may save you some time and headache from making tons of calls trying to make the decision.

If you are still on the fence of whether or not you should demolish a structure give us a call and we will be happy to help.

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