Should You Buy a Tear-down House to Build a New Home?

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A tear-down home build is the buying and tearing down of an old house in order to build a new home on the lot. This is the best way to get the home you want, where you want. This article Should You Buy a Tear-down House to Build a New Home? is to help you to consider the key factors that are specific to building a teardown home. These extra steps in a teardown home build are not the end of the world, but what you should informed about before getting into one.

Does a Tear-Down Home Build Fit Your Goals And Life Plan?

One of the first things to do is to think about where you are in life and where you are going. The investment of time and money in a teardown build is huge. So, you want to make sure this project is going to fit in with your goals and life plan.

Here are a few things to consider. Is my life constantly changing, or could there be a big change in my life? Such as…. New Job? New Career? Marriage? Divorce? Children? Education? Health Problem? With your lifestyle and likes in mind, where would you really be happy living for many years? Where do you want to live in relation to your activities, friends, and family?

These are just a few considerations to help you start thinking. So, take the time to look closely at your goals, plans, and possible situations that may occur in your life.

Evaluate The City or Town of The Tear-down House You Want to Buy

The main reason someone wants to build a tear-down home is for the location. Now, some towns or cities look inviting. But is it where you really want to live? Take the time to look deep into the city, such as, the crime, education system, work opportunities, parks, sports, and entertainment.

Most cities have websites that will help you learn about the township you want to live. Also, Google your interested city to see what comes up. Google will give you endless topics to research the city.

If you’re going to take on a teardown home build, you want to make sure you build it in the city that best fits your wants and needs. And if you find a big negative about the city, check out other ones in the same region, Chances are that you will find a great community that’s perfect for you.

Extra Permits are Needed When Tearing Down a Home

A big difference from new and teardown construction are the additional permits. Now, in most cases your builder will take care of the permits. But you need to be aware of these permits beforehand, so you know what potential problems there could be in getting them.

When a house is considered for a knock-down with a new build, the city makes sure it’s in compliance with the codes and laws, and the homeowner is adhering to them.

Here are some of things the city will take into consideration and expect from you.

What is the impact on the community? What is the structure and design of the house to be built? Are there toxins and environmentally harmful waste that needs to be contained, controlled, and disposed of properly? Based on these factors, the city will require the necessary permits.

So, to find out what a city requires, a phone call to the city’s building and planning department will get you started and help you learn the specific process, requirements, and permits for your potential teardown home build.

Is the Tear-down Property You Want to Buy and Build on in a Historical Preservation Area?

There are instances when either a house or an area may be “Historic”. You want to know this in advance, because this will determine if tearing down the house is even an option. Or, if allowed to tear it down and rebuild, you will have to adhere to their strict historical architecture guidelines.

It is often better to walk a way from buying a historic teardown house, unless you are willing to make compromises and follow the cities rules.

The City Zoning and Neighborhood Rules

Cities and neighborhoods have restrictions on what they will allow. So, depending on the size, layout, and structure of the house you want to build, there may be conflicts with the city’s zoning and neighborhood rules.

And if you want to rebuild a house similar to what’s on the lot, don’t assume it will meet the current rules and restrictions. These change over time. So, what was allowed, may not be now.

Hence, it’s best to check with the city zoning department and neighborhood association to find out their exact rules.

Utilities in Tear-down Home Build

Utilities play a key role in these three ways- availability, disconnecting before demolition, and installing new and reconnecting.


Just because a teardown house is located in a developed city doesn’t mean it has all the utilities available to it. You have to check if it has sewer or a septic system. Is there electric, natural gas, phone service, cable, and water? If it’s missing one of these, can you live without it or with it’s alternative. Because it can be very inconvenient and costly dealing without certain utilities.


Knowing the utilities of the house and the process for disconnecting them is crucial before demolition day. This process doesn’t happen over night, and so it needs to be planned. But the utility companies and city can assist with this and any permits that may need to be acquired.

Installing New and Reconnecting

Most utility hookups are standard, but some are a nightmare. Take for instance installing a septic system or a water well. These are big, expensive, and maintenance nightmare systems. You are responsible for maintaining these systems, and they are a hassle when they fail.

Financing Your Project

Teardown home builds are typically “owner-built” homes. That means you own the property and are building a house on it. This is different from buying a house from a builder who owns the lot, builds a house on it according to your agreed contract, and then sells to you using a standard mortgage.

Teardown home builds can use financing that includes the entire process of purchasing the old house, tearing it down, and building a new home. These are called construction to permanent loan. On the other hand, it can be divided into 2 loans, one for the construction aspect and one for the home mortgage after construction.

The Additional Costs When You Buy a Tear-down House to Build a New One

The cost in a teardown home build should be viewed the same as any other home build. What does that mean? The importance is on the total cost of the project, the new home appraisal, and the budget of the homebuyer.

So, if the new home appraisal and buyers budget are under the project’s total cost, the individual costs of buying and tearing down of a house are irrelevant.

Now, if you buy a tear-down house and build a new one that will make the project cost above the appraisal or budget, you will have to determine whether you want to pay for that higher cost yourself. Because, if your financing, the lender will only lend according to their guidelines. They will not take extra risks if the appraisal number doesn’t meet those guidelines.

How Is The Resell Value of a Tear-down Home Build?

The concern for resale value is not any different from buying or building any other house. Housing booms and declines come and go, and communities thrive and decline.

The best thing you can do is to look at the neighborhood and community to see what’s the current state of it and where is it trending. Are the residence happy to live there, or are they becoming disgruntled? Do the builders like to build there? Do the lenders like to lend there? Is the township maintaining what it governs or even making new strides, improvements? These questions, and others surrounding these topics, will give you an idea about the community and it’s future.

You Need a Great Team to Buy a Tear-down House and Build a New One

A key to helping you evaluate whether to do a teardown home build, where to build, and going through the build process comes from your team.

Building a new home is an exciting adventure, but it’s also very overwhelming. Knowing what to do and who to hire are huge challenges. Our guide How to Find, Interview, and Vet a Home Builder can help you find the right builder. Check it out to start your build right.

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