Teardowns often involve demolishing an older home and replacing it with a larger, updated new home. Such development can draw the ire of neighbors. However, teardowns can sometimes involve newer homes. Here is one example from the Chicago suburbs:
The proposed project in Elmhurst, however, involves demolishing an even newer home. Jim Bowen, CEO of Wheaton-based exchange-traded fund sponsor First Trust Portfolios, and his wife, Marisa, plan to knock down a house built in 2012 to create a larger lot for a new house they will build.
In early 2013, Marisa Bowen paid $1 million to buy the newly built, 4,044-square-foot house from its builder. Then, in 2017, the couple paid $440,000 for a vintage, 1,683-square-foot house next door that they subsequently demolished.
In August, the couple received Elmhurst City Council approval for yard setback requirements for a new house they plan to construct on the combined, 0.45-acre property. Elmhurst officials recently told Elite Street the couple has sought a demolition permit for the nine-year-old house. City documents show their plan is to construct a new home with a 5,012-square-foot footprint.
Teardowns require some resources as the purchaser needs to buy the existing home, pay to tear down the home, and then construct a new home. In particular locations, a new, larger home can pay off in significant profits.
This case is a different in several key ways. First, it involves one relatively new home. Teardowns are intended to provide more space and newer features compared to the residence previously on the property. The nine-year old home would appear to have some desirable features: according to several real estate websites, it has roughly 4,000 square feet, it has a three car garage, and is worth more than a million dollars. The proposed new home is even bigger and may have different features.
Second, the teardown involves combining two lots and demolishing an older house in addition to the newer home. This process can sometimes go the other direction: someone takes a larger property, subdivides it, and makes even more money by selling multiple homes. Here, the older home is relatively small by today’s standards: over 1,600 square feet with 3 bedrooms and 2 baths. By tearing down two homes, the new larger house will have more space to fit on a larger corner lot.
Because this involves a newer home and two lots, this is going to take some money. Teardowns require some resources as the purchaser needs to buy the existing home(s), pay to tear down the home(s), and then construct a new home. The payoff can be high, either in resale value compared to what was there before or in a more desirable home for the current owner.