# Sell house or build infills in Calgary? Advice please!



## Univibe (Nov 19, 2012)

So.. My parents bought a house in Altadore in Calgary around 1954. My mother passed away 12 years ago and my father just went into a nursing home so the house is empty..

Altadore is a fairly hot neighborhood for real estate with half duplexes selling around a million. Of course people have been practically breaking the door down wanting to buy the house to tear it down and build. I'm thinking, yes I could put it on the market and sell it, but why not build myself so I can make the money instead of someone else? I have no experience in having a home built and wouldn't even know the first step, or if I would be best off just handing it over to someone else..

I should mention the house if quite run-down and would need a lot of renovations to rent..

Any ideas? Thanks!


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## Snuff_the_Rooster (Oct 26, 2012)

been in similar and know will be there again before too long.

My answer is always the same and is easy.

SOLD,....get money...move on....

but I not a dick around type guy and have place to put it where I know field and is of best use.


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## donald (Apr 18, 2011)

Be careful-*what advantages do you ''really'' have?(i'm in the construction business)You will have to run the project for @least 7-9 mths(with constant delays & project managing multiple trade companies on your dime is not easy-change orders/issues you have no knowledge on and are pressured to make decisions ect--to move the project on time and budget,while you hold down your day job)dealing with the multiple quotes and not knowing or being able to assess the quotations and what is intailed(Bob villa books and homes on homes/goggle aint going to help if you have zero knowledge fr concrete all the way to finished materials of the homeand more importantly pricing everything out-labour/material,dealing with bank draws ect ect ect)

Home building(esp if your building a 1/2 million dollar home and up is not easy)and is best left to professionals-(it's a disaster waiting to happen imo)Alberta is booming and to secure the best you will pay top rate(and then some because trade guys will know you are green,private)and believe me when i tell you this:you will not get away with haggling/common deal making you would normally do-Trade guys will not buckle @ all(not like your local best buy) and are in demand(and know it)you are @ there mercy and you won't be ''pulling'' the "im doing you a favour"----your extra profits will go to other's pockets---and in the end you prob break even or loose some---not a great idea....just my opinion(and this isnt even touching on the quality of home that will be built)....hand it off to a home building firm or a pro fessional independent project manager.


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## rikk (May 28, 2012)

Univibe said:


> So.. My parents bought a house in Altadore in Calgary around 1954. My mother passed away 12 years ago and my father just went into a nursing home so the house is empty..
> 
> Altadore is a fairly hot neighborhood for real estate with half duplexes selling around a million. Of course people have been practically breaking the door down wanting to buy the house to tear it down and build. I'm thinking, yes I could put it on the market and sell it, but why not build myself so I can make the money instead of someone else? I have no experience in having a home built and wouldn't even know the first step, or if I would be best off just handing it over to someone else..
> 
> ...


Well, if it was me, and I was considering building, I'd first contact the contractor that has built for me in the past, sit down with him to determine what to build, and have him provide me an estimate (there's permits, the demolition, the subcontractors to bring in ... ). Beginning with that, I could determine how much I'd need to borrow, and after all the borrowing/selling costs, determine about what my profit might be. If the contractor I have in mind was not available, I would not consider such a venture ... the contractor is key ... he's the guy that knows city hall, the subcontractors ... he's the guy that gets the project completed.


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## Four Pillars (Apr 5, 2009)

Univibe said:


> why not build myself so I can make the money instead of someone else?


That's certainly an option, but you are making the assumption that there would be some profit if you have the house built (I'm assuming you aren't going to do the actual construction work as you said). I think that's a risky assumption. If you are 'in the business' and have a regular crew working for you, you might be able to do it cheap enough to make some money. As an 'amateur', there is no guarantee of any profit at all.

The other thing is time -are you willing to spend a lot of time on this project? Even if it is profitable - will your hourly cost be high enough to justify the project?



Univibe said:


> I have no experience in having a home built and wouldn't even know the first step, or if I would be best off just handing it over to someone else..


The problem with a first time project, is that they are usually learning opportunities. Once you get some experience, you can apply that knowledge (which you might have paid dearly for) to other similar projects and eventually make a decent return at it.

If you are just doing this one time - it might be very hard to make it worthwhile.


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## Sampson (Apr 3, 2009)

How big is the lot? Is it a minimum 50' x 120' or a more attractive larger lot?

This breaks conventional investment practice and analysis since the home is already owned. Are ther any costs associated with taking it over (residual mortgage balance etc)? Does your father still own it? or has it been passed on to heirs? Is he and/or siblings supportive of such a project? Do you have any formal project management experience?

You also have to ask yourself the questions posed above, is it worth the stress, time and everything else over the next year plus.

Lets do some back of the envelope. (assume house is owned straight out, still in your father's name)

Option 1: father sells home - pocket full amount, tax free - $500,000-$600,000

Option 2: renovate - rent, until further decision can be made (cost $50,000 to renovate entire house professionally) - assume rent of $1500-$1700, (Income of $1000 per month, about 4 years to break even and start generating real profits) - can also sell the house down the road assuming Altadore continues to appreciate at above average rates.

Option 3: demolish and build duplex infill. I've seen real and good estimate rates of ~$200/sqft for new duplex infills in Calgary. This means your 'standard' small duplex of roughly 1700-1800 sqft ea. will run close to $700,000. Your net sale should amount to $1.6 million, for a final profit of $900,000 less taxes, less carrying costs, less frictional burn. Now it will no longer be considered a primary residence, so taxes will be quite high. Subtract the $500,000-$600,000 you would have gained from the house as is, and it leaves $300,000 before costs as profit. Almost half to taxes, no ask yourself if you want to expose yourself to liability of over half a million of liability, one plus year of head ache, for somewhere between $100,000-$200,000.

I personally would pick option 2. It will give you some experience dealing with tradesmen, help you 'hone' your project management skills, and allow for potential future appreciation (although the market could obviously fall), and you will have an income generating asset at the end of the reno no matter what you go on to do in the future.

My 2 cents, or 3,4, and 5 cents


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## Four Pillars (Apr 5, 2009)

Sampson reminded me of the financing - is that something you can handle? What if the market drops and you can't sell after one year - will that be a disaster or can you just rent it and not have any $$ issues?

I'm not a fan of #2. Really depends on what needs to be done with the house, but if it is really a wreck - $50k won't be anywhere near enough. If the house is that bad, better to tear it down (like I wish I would have done with our reno).


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## Plugging Along (Jan 3, 2011)

I think I would sell in your case.

If you don't have any project management, construction, or real estate experience or knowledge (which are the three things you will need for this project), you add no value to the process, and really will not be saving anything. You will be learning as you go, and chances are be making a lot costly mistakes. If you want to do this as a project for growth, and as a learning experience, I would say that might be a reason. If it's strictly to make more money, I think that you will have a lot more surprises than you can think of.


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## Charlie (May 20, 2011)

Univibe said:


> why not build myself so I can make the money instead of someone else?
> 
> I have no experience in having a home built and wouldn't even know the first step


Asked and answered. 

Your value is in the land. The builder's expertise may create more value on a build, but that's not expertise you have. Very risky to learn on the fly in an expensive market. I wouldn't renovate either -- except the bare minimum to make it rentable if you want to hold it for a bit. Or if you want to live there. A 50 year old run down home on valuable land is destined for tear down unless it has some strong redeeming features. 

Would you buy today with the intent to build? If not, why are you considering this type of venture now.


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## Berubeland (Sep 6, 2009)

What about tax implications as well, if the father sells the property and it's still his, won't he pay no capital gains on the earnings as it's his principal residence? Then if you build on it, is the property in your name? What happens then?


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