What they paid and what they’d spend to bring that older hime up to modern standards of a new build will cost MORE than that new build. Not everything is about can you get your mobey out of it if you sell it. Most things aren’t. Most people have no problem buying a much more expensive car than they “need” and that has terrible resale value. A place to live that you enjoy is just as valid an expense as is any sports car.

Are you saying that you are considering buying an empty parcel of land in the historic district? And that you would, thereafter, design and build on the empty parcel? Or are you buying an existing house which you would upgrade and/or remodel and increase size? Your situation is not clear.

Designing and building in designated "historic districts" often requires special design and construction submittals and approvals. In such cases, it's common for there to be a long lists of "dos and don'ts", including exterior materials, colors and architectural styles. And it's very common to have a Historic Resources or Design Review Board which will have to review and approve your proposed design.

If you have not done so, one of your first steps should be to visit and discuss the required procedures, costs, schedules and other architectural requirements with your local planning official or zoning administrator. This can really be a big, expensive and time-consuming deal, so do your due diligence.

Your situation may be much more than a future resale issue.

Good luck on your project.

Is there such a thing as a reasonable "I won't get this back if I have to sell" budget?

Absolutely, but we can't tell you want it is. That's entirely a question of your personal financial situation, not of objective real estate reality. To take an extreme example, Bill Gates and I certainly have very different budgets for what we willing to spend on our houses knowing we won't get it back. Figure out what you can afford to spend comfortably without any guarantee (or maybe even likelihood) of getting it back on resale. That's your budget.

I have a lot of wisdom, but you forgo-ed that segment.

@Mark, if not wisdom, you can still add entertainment value. Some of us on this forum--probably the vast majority-- don't get out much....

Definitely do research any restrictions on what you can build.

Know that there are different types of historic districts. The first are those that are informally known locally. They may have neighborhood signage and people refer to them as historic but they have no formal designation or legal protections. Building there or remodeling there is like anywhere else in the same city, governed by the local zoning and building codes.

The second type is National Register Historic Districts. These are designated on the federal level. These protect places from being adversely effected by federal funds (such as highway and transportation projects) and open up opportunities for federal tax credits and where applicable state tax credits, but often only for income producing properties. Aside from that, the designation doesn't typically limit a homeowner from doing anything they couldn't anywhere else.

The third type is local historic districts. These are typically designated by the city government and are the most likely to come with restrictive covenants that govern how a property may be changed or what may be built on land within the district. They often also have a review board that approves all work permits in the district, but how strict this review will be will vary from city to city and even sometimes from district to district.

As to resale value, I live in a similar (federal) historic district where the value of houses are less than what it would cost to build new. Houses in good condition and of high quality sell in the $90-$120 per square foot range. In this area with the lot one would be unlikely to achieve a house of competitive quality and features to the historic homes for that same price per square foot. And so our area hasn't seen any new construction in 25 years.

But my case is very specific to me, as yours is to yours. Talk to a realtor who is very familiar with this neighborhood. Tell them the spec for what you want to build (size, number of bedrooms, bathrooms, features, quality, etc) and they should be able to give you a range for what they would list it under current market conditions. They may also be able to give you a forecast for where they see the neighborhood going based on the last few years, as well as how much any of the existing houses might sell for if they were rehabbed.

Next, figure out what it will cost to build this hypothetical house. You could talk to a contractor or local architect, or look at local home construction statistics to find out a rough estimate. Chances are it will cost you more to build than you can sell it for in current conditions. That happens even in suburbs, especially new neighborhoods with lots of new construction. The last two questions to determine though is one of the most important: 1. what is the projected worth of your house in the future based on how long you foresee staying there. 2. If you have to move before that time for unforeseen reasons (a year after building even), what could you sell it for, and could you get out unscathed at that sale price.

Those are all pretty high level numbers and estimates, and all things that should be easily accomplished in two weeks. As a positive you may find an architect and/or builder who can make this a reality in the process.

Hi, all, and thank you for your comments!

To answer a few comments/questions:

It would be a new build in a historic district.

The location of our lot is on the national historic register; it is also governed by a local historic district commission.

I have the general requirements for building: It must be set back in line with other residences already there, 2 story, any garage must be rear facing (there is an alley behind), the style must be in keeping with the neighborhood, min. of 2200 sqft, we have to retain at least two of any old growth trees that are in existence, we have 18 months from plan approval/sale of land in order to acquire an occupancy permit. I am waiting to hear back from planning on the build-able footprint of the lot as Builder A requested.

We have an "in" with the commission in that one is a board member with my husband; so, we've run some stock internet plans by her for an idea of what they would/would not approve and spoken with her about potential issues (like, the existing trees on the property inhibiting a driveway and look to be shedding A LOT of branches). She has given us confidence that we'd be able to find workable solutions and, in speaking with the city planner in charge of the historic district, he has said that they would extend the time table to start building/acquire occupancy, so long as we were showing progress. The area is up and coming; so, they want to encourage residence who are committed to the community (DH works in the public sector in the city and I work for a local CPA firm).

Having recently (in the last 6 months) relocated to this state resale is important to us - although I've fallen in love with the area, the kids seem to be thriving, and DH is warming up to it as the weather improves - SAD is real and coming to the midwest in winter (from the south) is probably not the best timing, LOL - we are very aware that life can throw a curveball at you. We want to mitigate that risk by buying and building smart. We are willing to overspend the market rate because we believe in the area and have loved downtown life so far; but, deciding on a realistic boundary is important.

We've connected with one builder/designer who felt our $300,000 budget would be a challenge to pull off but understood our reasons for that cap; he's going to brainstorm with his team and see if he can come up with something that would give us what we asked for (4 bedrooms, 3 bathrooms, first floor mini-master for my mom, a home office space, mudroom/laundry, 2 car garage, one eating space, a basement); I should hear back early next week. I have another builder/designer we are meeting Wednesday.

In the meantime, I'm "hearting" houses on Zillow that are in our build budget and appear to have the space we need (none have the location we want) so that we have a growing understanding of the market.

If nothing comes of it; well, it's been an education so far! Thank you so much to those that commented here. I look forward to interacting with you more in the future.

Oh, and if you want to comment on an internet plan, here's one I loved but is, per Builder A, way outside our budget (I would have switched the home office and laundry room and eventually wanted to connect the house and garage with a breezeway): https://www.architecturaldesigns.com/house-plans/four-bedroom-narrow-lot-home-9396el

The want list, with the restrictions, and most of all that budget, are a difficult combination. Especially at the square footage you are trying to limit yourself to. Look at old home plans of Foursquares. Those are strongly suited to narrower city lots, and use the vertical dimension to make it all work. But without the downstairs bedroom and 3rd accessible bath that is going to be a strong driver of costs here.

One option could be to give up a formal dining area for now to that bedroom space. If you can wrangle a big enough eat in kitchen to make that work. That’s what we did in the old 1911 Foursquare that we rented as just post college students. The shed roofed addition to the rear contained the laundry and the full bath. The dining room had double pocket doors that separated it from the living area, and were kept closed for it to serve as a bedroom.

So almost open concept, but better! The second floor held 3 bedrooms, one bath, and the attic had really tall ceilings and was ripe for being converted to an amazing master suite.

Something squarish, tall and traditional, like that would fit the described neighborhood.

Yeah, that's what I've been thinking; and I don't want a separate dining room anyway; so, that aspect would be fine for us.

We are ok with more basic things too; like, I'd be fine with an IKEA kitchen and then, perhaps, in 10-15 years we could upgrade to something of higher quality if market values increase or we don't feel as vulnerable to the market. Crown molding, for example, could be added down the road, too.

But, I don't really have any experience so I could be totally misunderstanding costs and how it works. I also don't know how to find someone that builds quality homes that would also be ok with putting in "good enough" finishes. The first person we talked to told us we wouldn't like that; but, I'm not really sure what he meant or if that response is normal in the industry.

Is an 80 ft by 132 ft lot considered narrow? From my reading we need 8 ft side setbacks that seems like there would be wide enough to not require a narrow plan.

If you insist on using an internet plan look at The Bungalow Company. He is an architect and will work with you to adapt his plans. They are one of the two companies I can see using. The other is Alison Ramsey.

However, if it were me building again, I'd get in touch with architectrunnerguy to design me a custom home. I know when I was designing mine, he had some excellent suggestions for me.

No that is not a narrow lot, in fact I consider that a wider than normal lot. In my area, some lots are 40 feet wide but the most common is usually 60 feet wide and somewhere between 120 and 140 feet deep

Your regulations sound similar to my area. You might wish to look around the district and identify any homes constructed in the recent past to get an idea of materials and designs which were approved. Here, the Design Review subcommittee has all their minutes of recent meetings online so this will give you an idea of their concerns and pet peeves.

Remember a well designed, well constructured house will always command a premium. It may not be much, but don't just take an average price of recent sales to set your expected sale price when you would be at the top of the market. There are so few homes with modern amenities in such a neighborhood that you may underestimate the desirability of the new build. I talked with an older person recently who must move to a home with easy accessibility due to mobility problems and she would love to stay in the historic area if only she could find a suitable house.

I realize that prices are limited by the appraisals but don't believe that a new build in a historic district is any less valuable than the same house built in a subdivision of similar houses. If the historic district is a desirable neighborhood with good demand for homes, I would not be worried about a home costing slightly more than the neighbors. I am thinking perhaps 10%, maybe 15%, would be reasonable, like $20k to $25K on a $200,000 house.

If you have a first floor suite, be sure to have a suitable area to put laundry on the first floor. Even if you choose to have your laundry in the basement, first floor laundry is a highly sought after feature here. You could have a large closet with the plumbing roughed in so future owner would have only a minor amount of work to complete the project.