Beware of one thing when dealing with a bank and doing a teardown - unless you make it very clear to the bank that you intend to tear the house down, they will end up being very concerned when it starts to come down. We recently had a situation where we bought a house and took out a mortgage for only about 50% of the bank-appraised value. We bought the house because it was a fixer-upper and we wanted to tear it down and rebuild. It was in very bad condition, and everyone else looking at it during the time we were making an offer on it felt the same way...there's no way someone could have lived in the house for long without fixing it up. We even told our mortgage contact at the bank that we were planning to tear it down and rebuild (with our own cash not a construction loan). He seemed supportive and commented many times on what a great lot it was and how nice it would be when the house was "done." So, it was clear to everyone involved that it was planned to be a teardown. Long story short(er!) - we bought the house in Sept, and in January, when we had our completed architectural drawings, structural drawings, had received building permits and were ready to start demolition, one of the final items on my list was to obtain "course of construction" insurance, which takes the place of homeowner's insurance when you are dealing with a construction/teardown project. In the process of signing the insurance documents, I noticed that the insurance company wanted to know if the bank should be listed as an additional payee in the case of a claim. I called the bank to ask if they're typically listed on a course of construction insurance, and after speaking with a few different representatives (none of who knew anything!), I was transferred to the office of the VP of Risk Management (or something like that)...anyway, someone on her staff almost had a fit when they heard that we were about to tear the house down. She kept saying that our house is the "bank's collateral" and not ours to do what we wanted with and that we could not proceed until we had the appropriate bank approvals, etc, etc. Keep in mind that we were not asking for the bank to pay for the construction, we are paying for the construction in cash, and we had an appraisal (done by the bank's OWN appraiser!) that was completed in September which showed the value of the entire property to be $1,100,000; they even broke this down between the lot value (approx $950,000) and the house value (approx $150,000). We have a mortgage for $500,000 so obviously, even in a worst case scenario, if the house was torn down and never rebuilt, the bank has FAR more collateral in the land than they ever had in the rickety old decrepit scary house!! Still, this person INSISTED that she had to go to some sort of approval committee and get approvals before we had a demo truck even enter the property. My husband and I were furious (although also somewhat bemused by this bizarre lack of logic and ridiculousness) and we spoke with several others at the bank who listened to our story and believed us when we told them that we had been very clear with the mortgage person during our loan approval process, telling him all the time that we were buying a "teardown"!! Our point was that, if there were further approvals necessary, he should have told us about them up front. Finally, we had a senior VP reluctantly agree with us but we are still being hounded by this VP of Risk Mgmt who is still insisting that we need to forward her a copy of our contract with our builder, our approved architectural/structural plans and all kinds of other info! At this point, we're ignoring her (because we have the approval of the senior VP), and construction has started, but this has been a big pain and total surprise. I'm telling you this long story because it just illustrates how crazy and upside-down the banks are these days and how their underwriting/loan approval processes have gone wildly from one end of the spectrum (super wide open) to the other (absurdly tight). My husband and I are the perfect clients for them - we have stellar FICO scores, have a longstanding history of repaying all our prior mortgages (two of which were with them), and MOST importantly, the bank has MORE than enough collateral in our current property to cover it all even if we never paid another dime!! So, I'm sorry to say it, but like others have basically said, I would be surprised if you get a construction loan with your current situation, and IF you decided to and could somehow do it on a line of credit or home equity situation, BEWARE that the bank will have a fit if/when they find out that you're tearing your house (otherwise known as the bank's collateral) down. Sorry, I don't mean to be a bummer about all this but it's best to go into it with eyes wide open and know the current lending/housing environment. Whatever you do, best of luck!!

The cost per sq ft can vary tremendously, depending on what materials you choose even more than the cost of labor. Actual cost could be much lower than $165 or double that! Is the process of building hard? Yes, and the less you plan and decide in advance, the harder it is. Even if you don't get into the mechanics of building, and don't expect to do more than choose colors and finishes, there will be approximately 987,000 decisions to make that you never expected. Do your plans in advance with as many details as possible -- it's unfair to others (spouse, architect, GC, foreman, mason, HVAC, etc) to expect them to mindread what you want, and it's unfair to your budget to make decisions at the last minute. Last minutes decisions almost always cost you lots more than those made before the build began. Besides, your contract should be so well written that only a hurricane/flood/etc should cause the need for alast minute decision. Your husband is right that you aren't aware of all the difficulties, because NO ONE ever expects the build to be as problematic, time-consuming, detailed, and unexpected as every build actually is. Even experienced GCs with many houses under the belt can be caught by surprise --- by a boulder, or by lumber costs, or by a hurricane/ tornado/ blizzard/ flood, or by clever thieves, or even by his favorite expert crew going on vacation. Because of the stresses involved, your marriage will either deteriorate with remarkable speed, or improve slowly. Whichever happens, the couple that moves into the new house are not the same people they were when they first met the architect. Personally, I prefer people who have built a house; there's something about the process which adds a wonderful depth of character that no renter can achieve.

So, if they want to give you some of the land, fine. They can legally subdivide their land and give you a piece. You then build your house. The only question is if you want to live there -- presuming you can afford to build a house. This is a side issue, but the land can't be legally subdivided. We can only build because their existing house is so small it can be considered an "accessory apartment", even if it remains a free standing structure. And yes, we can afford to build. We're very close to paying off our existing mortgage on our current house. If they want to stay in the existing house, they can hire the repairs made. They don't seem to care if it's 'remodeled'; they just want to be safe. Well here's the thing. Their current house is just a mess. I don't mean dated, I mean that there's tile falling down in the bathroom (shower/tub is unusable), the roof needs to be replaced, wall board is popping out from moisture in the finished basement, the outside shingles need to be replaced, and too many items great and small to be listed. We live very close by. I've offered to set them up with contractors when we've had work done to our house, I've offered to help them with practical legwork involved in hiring contractors, if there was a hint of financial issues, I'd happily jump in and offer financial assistance. They want the magic person who will read their minds and do it all for free falling into their laps. Now a side of me says, "Forget about it!" and let them let their roof fall in if that's what they really want, but they ARE my parents and I do feel some diffidence about that stance. Exploring the ins and outs of us building seems to be a good time to also explore this issue. I think what we are going to do is talk to a few good builders and get some honest assessments about what is and isn't feasible. I'm thinking (hoping) some estimates about what's involved will either get them on board or allow us to figure we're not living there in their lifetime and move on.

Cost per square foot for remodeling versus building new is always going to be skewed. Reason? To remodel, the existing structure must be disassembled to a point to rebuild. Double labor. New construction is simply building to finish. Single labor. The tipping factor where remodeling is more expensive than rebuilding varies tremendously. If the building requires plumbing/electrical/HVAC reworking plus structural changes, chances are building new will be less expensive. And may be faster. Minor plumbing/electrical/HVAC/structural is always less expensive. In your case, the tipping factor is how much you intend to do. Straightening walls/floors can be a major overhaul, especially when a complete roof is in the plan. Adding bigger windows is a major remodel, and is more expensive than simply replacing windows. Reason? Sheet rock has to be removed, exterior siding has to be removed past the dimensions of the new windows to allow proper framing of the new openings. New window costs, labor to tear out, and labor/materials to replace sheet rock/siding. If the siding cannot be reused(after being removed) new siding has to be bought/installed/primed/painted. Replacing four windows can easily require residing that entire side of the house. Leveling floors will require tearing out the old, repairing/replacing the joists. Same with the walls. Roof may need complete rebuilt to be right. Rip off all the old roofing/sheathing/rafters and rebuild from the top plate of the walls. Could all that be done without all that tearout? Not if it is done right.`