I found a video from This Old House that gives some great starting tips!
Two things, from the video i'm not using lap siding, and my house's sheathing layer is just the T1-11, I don't have OSB and a moisture / vapor barrier. This presents some unique challenges.
Below is a picture of the side of my house needing repair, it might be hard to tell but when wet I could push my finger through the bottom few inches easily. While its dry it crumbles really easy when I pull up on it. I recommend doing the tap test to figure out how much needs to be replaced, I start from the top about 10 inches high and working my way down I tap gently to feel the density, its easy to tell where the soft parts start. Mines about 5-6 inches above the concrete foundation.
Skipped ahead a few steps to show you what the bad parts at the bottom look like you'd see the following that was cut away.
The first thing I did was figure out my length and depth that needed replacement. The trim pieces go over your siding so you'll need to figure out what you want to do around the trim. I ended up doing the length up to the trim, and cut and replaced the 1/2 piece behind the trim.
My length was about 21 feet, the depth I chose was the depth of the trim 3/4" plus the depth of my T1-11 siding 1/2" for a total of 1-1/4". Therefor my new trim piece along the base will be equal depth to the existing trim.
Next remove all the vertical trim along the side you're replacing, So not to cut off the trim with the circular saw. Then take a chalk line and have one person (my wife hold it exactly 6 inches above the concrete. Move over about 10 feet and marked 6" up as well and drew my line with a chalk snap. Double check its flat with a level, its better to measure twice and cut once as my dad always said.
The cutting isn't to bad. Simply set the depth of your circular saw so the blade tip to the guard band is only the depth of your T1-11 siding. In my case that's 1/2 inch. DO NOT CUT YOUR STUDS!
A few learned hints, cutting this on a 94 degree Fahrenheit day is not ideal. Second, if you're cutting make sure you do 4 feet segments, the T1-11 is in 4 foot siding interlocks and makes it easy to stop at these points. As you slowly move along the side of your house don't stop for too long in one place. I found the blade would heat up the siding and kind of make a warm/smoke smell. You don't want to catch your house on fire! I had a hose handy just in case and on occasion would spray a little water on my new cut seam right after cutting.
Once cut, take a hammer and pry bar and carefully chip away at your cut siding until removed. Should look something like the image below.
Next I needed to install a new moisture / vapor wrap over the exposed boards. For some reason my house didn't have a moisture barrier under all its T1-11 siding, only the lap siding on the front. This is not ideal. Anyways I used an asphalt roofing paper. The goal was to get 2-3 inches above the inside of the siding. This can be tough since so many times the siding is nailed down. A couple easy solutions that saved me tons of time was to gently pull up on the siding at the studs with a pry bar, careful enough not to damage the siding but enough to loosen a nail or two.
This next step I found online from a guy named Steve Hamilton. I love this idea! You pry out at each stud and right above drill a 2" screw in the siding and stud, this holds the gap while you install flashing and vapor barrier. Genius, and a must do!!!
Maneuver your moisture barrier up as far as you can and staple it to your studs and joists. Make sure to overlap the barrier strips at least 6 inches.
Before installing your new trim this is the prime time, pun intended, to prime and seal all sides of the new trim board before installing it to your house. Add one or two layers of paint until water proofed and looking good. While its drying we'll start installing the z-flashing.
Z-Flashing is basically the shape of the metal flashing. Make sure its just over the depth of your trim piece. The goal of the flashing is to provide a transition piece for water between the siding and the trim board. It also lets moisture behind the wall have a way out, we call this breath-ability. If this wasn't needed you could just caulk between the boards and be done. But breath-ability is very important. So don't caulk between the flashing and the T1-11 siding! Make sure there is room for the drip to settle and don't let the siding sit in the flashing. Leave about a 1/4 to 1/2 inch gap vertically between the just cut T1-11 and top of the flashing. Once nailed in, you can give it a slight bend down so water doesn't pool up on the trim. The bend is optional in my opinion.
My flashing was purchased at HomeDepot but you can find it at many hardware stores. Mine was 10 feet long so it doesn't meet the total length needed. Overlap by 4-6 inches for transitions and caulk between the flashing transitions. Use metal snipers to cut the final piece. BE CAREFUL WEAR GLOVES!
No need to caulk between the z-flashing and trim piece. Remember you need a way for water to get out if it got behind the flashing and trim.
When you go to nail your trim in, use 2 1/2 inch or longer galvanized nails.
Once your trim is hung and leveled, use exterior paint-able caulk to seal the sides and pieces (see the red lines)below for where to seal. Between all transition pieces. You don't want to seal behind the trim board and the siding. You want it to be breathable just in case moisture got behind it. If water were to run down the front, you don't want it to go behind everything.
Once its all caulked, make sure you seal all the nails with caulk or paint. I put a layer of white paint that I had laying around over everything. Using the color of your house is recommended, so don't worry we'll be painting soon.
Thanks for checking out my post, if you have question please let me know below.