House #43: Preliminary Budget

January 27, 2013 · 14 comments

The Tear-Down House is certainly going to be a learning experience for my partner and myself. While we’ve both done some major rehabs (and he has his General Contractors license), this will be the first time for either of us that we’ll basically be building new construction.

Pretty much the only things that won’t be new construction on this project are the foundation that we’ll be saving from the original house (we’ll be adding on to it) and the existing utility connections. And the one added expense/task over new construction will be having to demo and haul-away the existing structure. In the end, I expect the savings on the foundation and the extra cost of the demo/haul-away will be nearly a wash in terms of costs. So, for the most part, I expect this project to cost pretty close to what brand-new construction would cost.

In talking to others who have built new construction in this area, I’ve heard building costs ranging all the way from $60 per square foot to $125 per square foot for mid-grade new construction. I decided to ignore those numbers when putting together my estimated budget, and after accounting for each line-item task, my total budget estimate came out to about $155,000. Depending on what size house we go back with (we’ll be somewhere between 2000-2600 square feet), it looks like my line-item estimate puts us somewhere in the $60-75 per square foot range.

It’s a little scary that we’re on the low-end of the range others are seeing, but like I said, this is a learning experience… 🙂

Here’s how our line-item budget breaks down:

Total Estimated Budget

14 responses to “House #43: Preliminary Budget”

  1. Gabe Larkin says:


    Is the demolition cost line item a bid you have received? If so, it seems high to me. There could be something I am not aware of, but here is what I can tell you. I demolished a ~1300 sq. ft house, judging from the pics it was about the age of yours and similar construction, and it took me four 30 yard dumpsters. I am currently paying 375 for a 30 yard dumpster in the same area your property is located. Even if it takes you 6 loads that is only 2250 to remove the structure plus the labor. On the 1300 sq. ft. house in my example it took me one day with a machine, operator, and laboerer; total additional cost ~1500. Now we were not saving the foundation so I was able to attack the structure much quicker than if I were saving the foundation. Even if you doubled the labor it would still have been under 5k. Now you may be planning on demolishing totally by hand, which would be a mistake imo, but even if you were that too should not approach 10k. I am demolishing the interior of a house in the Kirkwood neighborhood, and my guys can fill a 30 yard dumpster in something around 30 man hours. Assuming my calculation of 6 dumpsters is correct that is only 180 man hours to demo the house. Call it 200 and you could have all-stars at 20 dollars an hour and it would only cost you 4k in labor. Add in the disposal fee of 2.5k and you still are a far cry from 10k. Forgot to add, I think I paid 200 dollars to have the sewer capped, which had to be inspected.

    Of course, there could be something I am unaware of in a whole house demo in the City Limits which would render the whole comment moot. Anyway, feel free not to post this comment, I wrote it here on a whim. I should have pm’d you on BP or something. Good Luck on your project.

  2. Shane says:

    Wow am I really the first to comment on this? I’m curious where you think ARV will be on this house. I was just looking at your purchase price $30K + your “repair” (let’s just say rebuild) estimate of $155K. Knowing you’re not wanting to take that kind of risk for a low profit, I’m thinking somewhere in the $215-230K range? Also, Are you and your partner using all cash, even for these expensive ones, or are y’all using some other funding as well these days?

  3. J Scott says:

    Hey Gabe,

    First, thanks. This is one of those renovation areas that we’ve never had to tackle before, so I hadn’t put much thought into the cost.

    This estimate was put together prior to our getting any bids — I really had no idea what the cost to demo a house would be. That said, we now have some bids. The one we’ll likely go with is $6500. But, that doesn’t include the asbestos survey (which is required to get permits since the house was built in the 1950s) and the permits themselves. The survey is about $450 and permits are about $1000. So, all-in, we’re looking at about $8000 to get the demo done.

    We got several bids on the job, and the $6500 was pretty much the lowest. If you have a demo crew that you recommend, send me an email…always looking for contractors!

  4. J Scott says:

    Hey Shane,

    We’re targeting $230-275 on the resale of this one. And we’re using all-cash on this deal — splitting it 50/50. Getting financing for this type of deal is a bit more difficult and can be more expensive as well.

  5. Luis says:

    I agree with Gabe that demo. sounds high but your rational is sound.

    I also agree with you that $60-75 per sft. sounds way low. In one of the monthly meetings we had a couple of months ago we looked at an almost new construction in Decatur and they were at $85-90/sft. and everyone was surprised that is was so “low”.

    Is roof decking not part of the framing work? That’s news to me….

    I don’t know the location of this house but if it is where I think it is, inside the perimeter, 2,600 sft. of new construction would probably sell closer to $300k. Specially with the buyer craziness that is building up in this city.

  6. J Scott says:

    Hey Luis,

    We’ll probably be closer to 2000 square feet by the time all is said and done. Are first drawings came in at close to 2700, but we’re going to scale those down to save some money. Looking at the comps, it doesn’t appear that the extra square footage over 2000 sf will return the cost of building it.

    As for whether roof decking is included in framing pricing, who knows! 🙂

    Seriously though, this is going to be one of those things that’s a big learning experience for me. I have no idea what a framing package includes or doesn’t include, and we’ll need to get a few bids before I’m clear on what stuff I budgeted for twice and what stuff I didn’t budget for at all (for example, I also budgeted for sheathing under the siding, but if roof decking is included in the framing price, sheathing probably is as well).

    I agree the $60-75/sf sounds low, and it might be. The line-item budget is the best I could do with my current set of experience and knowledge. I’m sure I probably missed some stuff and I’m sure some stuff estimated incorrectly. On the bright side, my partner on this one has his GC license and is a construction guy; he does about 20-30 flips per year (including some major rehabs), so between us, hopefully we can figure it out as we go along… 🙂

  7. Dan says:

    Did you factor in the framing materials cost? I have built several new homes and I can tell you that the framing materials (framing lumber, plywood, sheeting etc) typically costs about as much as the labor. $15k for a 2000 sq. ft. house (for labor) seems about right to me. Actually might be a little high for Georgia. But I would expect to spend at least another $10k on materials.

  8. J Scott says:

    Hey Dan –

    Apparently, framing costs here are MUCH cheaper than what you’re used to. We’ve gotten a couple labor quotes for framing, and they are typically under $3 per square foot. That’s $6000-8000 for labor for the framing. I’m guessing $4-5 per square foot for the lumber package, though that could definitely be on the low side — I’ve heard lumber prices are pretty high these days.

    Regardless, based on the labor quotes I’ve gotten, I’d be real surprised if the total framing costs were more than $20,000. But, I’ve been wrong before! 🙂

  9. Gabe Larkin says:


    6500.00 is more like it on the demo. Can you elaborate on the asbestos survey? What happens when they find some items containing asbestos? e.g. a flue pipe, or some asbestos siding? Is there an extra charge from your demo guy to remove it, or has he baked in a certain amount of asbestos in his price? Is the demo contractor required to have some type of certification to remove asbestos? If so, is the low bidder qualified for asbestos?

    Unfortunately I do not know any contractors who specialize in demo in the CIty of Atlanta.

  10. J Scott says:

    Hey Gabe,

    Just getting ready to respond to your BP message! I just looked at the demo proposal, and it looks like the asbestos survey is to get proof that there is no asbestos in the property, which will allow them to get their demo permit without any extra work or complication. I’m guessing that if the survey comes back indicating that there is asbestos, the price will go up.

  11. Nikki says:

    Hi J.,
    I have searched high and low and could not find a “contact me” option so I’m hoping you don’t mind me asking my request here. We’re in desperate need of a framer for a deck enclosure (converting to a 3/4 season rm) and would greatly greatly appreciate some recommendations (we’re NE of the perimeter).

  12. J Scott says:

    Hi Nikki,

    Sent you an email…

  13. Alana says:

    Hi there,
    Thanks for this detailed post. We’re currently looking into remodeling our house from the inside out, so this teaser budget template is really going to help out draw up our own. I was thinking of getting a contractor who can handle most of the things we’d like done. Do you know of any all-in-one contractor that can handle more than five projects (framing, roofing, painting, cabinet installation, etc) all at once? Any assistance will be appreciated!

  14. J Scott says:

    Hi Alana,

    A good GC should be able to coordinate an entire renovation pretty easily. Where do you live? Perhaps I can give some recommendations…

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