The costs can really add up when building from scratch. If the property is in an earthquake fault zone you will be required to have an onsite geo-technical report done to detremine the properties buildability. That will also determine the spefics of the engineered foundation/piers. The property will now need to comply with all current building codes and county requirements. These include water and storage, fire protection-turn arounds-hydrants-, septic, access, set backs just to name a few.
On the other hand if there is any way to use the existing house and it's systems and go the remodeling route you will probably be able to grandfather in what is there and proceed much much quiker and for less expense. Always check with the County prior to removing contingencies to be sure you can do what you want to do.
You can ablolutely build/remodel in stages as your budget allows. It might work out better that way so you can fine tune an refine what you are trying to do as you live there.
Good luck with your project.
Alan, Michele & Ben Barbic
Coldwell Banker - Saratoga
A Family of Real Estate Professionals
DRE# 00989202, 01214145, 01358730