Scrape or Remodel? Answers from Dave Jackson
Q: Should I scrape or remodel my home?
• Look at other nearby scrape off projects and what they sold for.
• Look at your home and what you could sell it for, or what a redevelopment property would cost you.
• If you can sell your home for more than 25% of the highest new home sold comps… DON’T SCRAPE IT. In some Denver Metro neighborhoods like Hilltop or Cherry Creek North you can go up to 30%. But if your land value is 30% of your highest sales price you are in the danger zone. Better to remodel.
Q: What should I consider when deciding to scrape or remodel?
If no one else has done it, and sold it… don’t do it. There are fix and flip neighborhoods, remodel neighborhoods and there are scrape neighborhoods. Rarely will you find a neighborhood that makes long term sense for more than one of these.
Q: What should I not consider?
Everything should factor into your decision. The more you can research the better your decisions will be. Only take advice from proven experts.
Q: What are the leading misconceptions about scraping or remodeling?
Homeowners tend to watch HGTV and other real estate shows and they usually have a distorted sense of the time, money, effort, focus, and skill it takes to be profitable in re-developing real estate. If you run short on any one of these you can lose your shirt… or more. If this was easy, it would not be profitable.