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We hope this series of posts will be helpful for anyone interested in investing in older properties and remodeling them now or in future. As always, it's important to start with a plan. Of course, the best laid plans can go awry, but that doesn't mean you shouldn't know where you're headed.
I recently bought an older house for my primary residence and am planning to add substantial square footage (>50% of the original size) as well as redo the rest of the existing house.
There are many critical decisions you will have to make during the planning phase which will have impact during construction and beyond including the future value of the house. Some of these need to be explored before making the final decision to buy a property.
With the changing real estate market the buying price of a fixer upper and the cost of enhancements are important criteria. These numbers will need to be adjusted based on the reason for acquiring the property which could either be a buy-fix-flip or buy-fix-hold as a primary residence. A pro forma evaluation with breakdown of all the costs associated with the construction will be very helpful.
It is very beneficial to read the municipal code of the city where the property is located. Typically these documents are available online but are very tersely written and hard to comprehend. You may need to read a few times to gain good level of understanding. Also understand that typically city planning approvals are very different from building permits. Planning is interested in the outside look of the property and material used so that your construction does not impact the general look and feel of the neighborhood adversely.
A partial list of issues that need consideration are summarized below...
Remodel vs. New Construction
Will this be a remodel or brand new construction? This question has many implications that merit an entirely separate blog post. Suffice it to say that the terminology, definitions, interpretation, and enforcement of remodels versus new construction can vary city to city. It's critical to understand this before you buy a property that needs any type of construction.
Surveys
Is there a recent survey for the property? Most single family homes have not changed ownership in many years. A new survey should be done to identify accurate property lines and elevations. I made the mistake of thinking that my property line was the street edge — which turned out to be incorrect!
Square footage
Because the property may lack a recent survey, the listed lot and building square footage could be incorrect. The contract does not hold a seller or agent responsible for these measurements and puts the burden on the buyer to do their own due diligence. The house that I bought had the wrong square footage listed for both the lot and the building. Luckily, it was not off by much in my case, but every square foot could have an impact on the process, costs, and timeline for a remodel or new construction. At the end of the day, if you're adding square footage to the home, it's a value add as well. So go big or go home. But it's also important to know where you're starting from. So get an independent survey, too!
Non-permitted additions
In order to get your remodel plans approved, cities could ask you to either tear down or get permits for non-permitted additions made before you bought the home. Another factor to consider in your advance research.
Roof and ceiling heights
Are high ceilings a key piece of your remodel vision? Some cities may have height restrictions for rooftops. You'll need to check the zoning code. (More on that in a minute.)
Basements
Should you add a basement for additional space and/or storage? What are cost impacts to our overall project? Again each city has specific requirements that could make it infeasible before even considering the price.
ADUs
Is your lot big enough to add an accessory dwelling unit (ADU) for rental or family use? Every jurisdiction in California is developing and constantly refining its own criteria. A good agent keeps track of this so you don't have to.
Sprinkler systems
Is your home sprinkler system up to code with the Fire Department? Any delays to rethink or rejigger your system could add considerable costs!
Swimming pool
Is there currently a swimming pool? Would you like to add one? What impact will this have on the determination of new construction or remodel? Is it more trouble than it's worth?
Trees and arborists
Are there trees that will impact the construction and need to be removed? Most cities in the Bay Area have strict requirements on how to handle this, and it can be laborious. We can help you navigate the process.
Water efficient landscaping
In case of all new homes and sometimes remodels, a plan is needed for water-efficient landscaping. This involves careful calculation to determine the level of use.
Hazard zones
If the property in any type of natural or human-made hazard zone, you'll need to know the type and impacts this will have on your plans.
Planning approvals
Once you have your plan in place, it's time to get approvals and permits from the city or county. There are multiple layers of review, all the way from a simple over-the-counter approval to very lengthy review by planning commissions and city councils, which could take months — or years.
Zoning classification
The zoning of your lot will often pre-determine what you're allowed to do with your remodel in terms of height limits, setbacks, easements, even the square footage of your home relative to the lot size. Many single family detached homes in the Bay Area were built 30-40+ years ago and may not conform to current code, which means they are "grandfathered in" without alteration. The moment you begin your remodel, the home will need to be brought into conformance.
Public hearings and neighbor reviews
And finally, most remodels and new construction will involve some level of public hearing, with an opportunity for your neighbors to weigh in. It always helps to be friendly and make them aware of your plans in advance.
Please feel free to contact me if you have any questions.
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