Project budget the other way

In November, I looked at Plan A (minimal), Plan B (full on), and Plan C from a ROI perspective. I think it might be useful to come at this from the other direction.

I bought the house for $467 and Zillow thinks it's worth $519 now.

Address	Bed/Bath	SF	Zestimate	Per SF	Notes
817 118th	3/3	1596	$519,000	$326	Sold 2014 $467,000/ Lot 10,798 SF
801 118th	3/3	2760	$643,000	$233	Swierz--Sold 2012 $460,000
823 118th	3/2	1630	$597,000	$366	Rob
814 118th	4/1.5	2030	$758,000	$373	Across the street--Sold 2012 $630,100. Lot 10,018 SF
11803 8th	3/2.25	1940	$654,000	$337	Corner
11815 8th	4/2.75	2260	$747,000	$331
11804 9th	2/1	1560	$462,000	$296	Corner
11810 9th	5/2.5	3100	$786,000	$254
11738 9th	6/1.75	3760	$805,000	$214	Pool. Largest, most $$$ on block

The most interesting of these is 814 118th, a studs-out remodel in 2011-12 that earned $373/SF, the most on this block.

Plan A, at the moment, is about 1,860 SF, 3/3. At $370/SF, we'd be $688,200. Zillow estimates the home will appreciate at 12.48%, twice the Broadview or Seattle number. That would be $774 in 2016, $871 in 2017. Even at the more conservative Broadview number, it's $770 in 2017. $750,000 seems conservative.

Plan B is more vague--it's an additional 1,400 SF, bringing us up to 2,996 SF. At $370/SF, that's $1,108,520, but as we see with 11738 9th, houses that size fetch more like $300/SF, putting us at $898,800. At $250/SF, it's only $749,000--that's a big variation. We would still be smaller than 11738 9th, with no pool. So, let's say $805,000. That's $900,000 in 2017 at the lower Broadview appreciation. Say $880,000.

Working backward, we can determine the budget + profit number. If we aim for 25% profit after two years, we have our construction budget.

	$750,000	$880,000
Basis	$467,000	$467,000
Commissions @6%	$45,000	$52,800
Excise tax @1.78%	$13,350	$15,664
BUDGET + PROFIT	$224,650	$344,536
Construction (75%)	$168,487	$258,402

Plan A is 300 SF for about $562/SF. Plan B is 1400 SF at $185/SF.