Would it be cost effective to tear down our small 1940s home and build a new one?
My husband and I are trying to figure out if it would make more financial sense long term to sell and move or eventually tear it down and rebuild.
Some context:
• We’re in a very sought after neighbourhood in the middle of town in a city that’s growing quickly
• We bought the home for 340k
• The lot is huge for the area, 1/8 of an acre with a massive backyard and front yard, which is pretty unheard of in our town.
• We also have a fully built heated-floor workshop/double car garage in the back that adds a lot of value for us
• The current house itself is a small 1940s home
The thing is, the house is actually built pretty well and doesn’t seem to have any major structural issues. It’s just very small with a strange layout, and I honestly can’t picture raising 2+ kids comfortably in it long term.
Part of why we’re even considering rebuilding is because my husband is a carpenter, so we’d potentially save a decent amount on labour and be able to be more hands-on during the build.
If we rebuilt, we’d definitely want something bigger, more functional, and more modern while still taking advantage of the lot and location.
For people who have gone through this, or work in real estate/construction:
• When does a teardown/rebuild actually become worth it financially?
• Does being in a prime neighbourhood on a large lot usually make rebuilding more worthwhile?
• Would you renovate/add on instead if the current structure is solid?
• Are there hidden costs with tearing down and rebuilding that surprised you?
Just trying to figure out whether this is a terrible financial idea or something that could actually make sense long term.
Also I should mention, we would have a living space to live in for free if we did decide to re build.