Renovate? Demolish and Rebuild? Sell?
I have seen a number of related posts based around the question “Should we renovate or demolish and build a project home? Or should we just sell?” Unfortunately this is not a question that is easily answered and we are one of the only companies that can answer this for you. We are a new company that focuses on optimising home investments and we undertake this exact kind of analysis on your behalf to ensure you make the best financial decision. To explain exactly how we work I thought it best to take you through a recently completed analysis.
The family of four is located in Ryde residing in a 3 bed, 1 bathroom red brick bungalow that "they have no attachment to whatsoever". Before coming to us they had been through the process and met with a builder to discuss renovating to add the extra space that they needed. As one could predict it was difficult for the builder to accurately give them any kind of idea on price as there was no design or specification. In fact they really didn’t have an idea of what they wanted other than to add a fourth bedroom and bathroom and create a bigger and open living/dining/kitchen area. In the end his recommendation was that they might consider knocking it down as it might be a cheaper option.
They took it a few steps further and took a trip to visit the show homes of various project home companies. Like many people before them they found themselves yearning to live in one of these fully upgraded project homes rather than their old “charmless” house.
Following through on the idea that they could site one of these homes on their land they met with Ryde Council to discuss their options. Unfortunately for them it was unclear whether the Council Controls would enable them to build particular project home they wanted.
Weeks went by and they found themselves searching for answers without really having enough information to make the decision:
• Is their house worth renovating?
• How much would a renovation cost?
• How much would their house be worth after they renovated?
• Would they overcapitalise on a renovation? Are project homes desired by buyers in the area?
• Would they overcapitalise by demolishing and building a project home?
• What hidden costs are there with the project home companies.
Then this particular couple found out about i.DWELL reviewed our case study project and engaged us to undertake the assessment on their behalf.
The first step was to meet with them and establish their goals.
Ie. Budget, wants and desires, time frame to live in.
The second step was to establish the planning controls and whether their property met the criteria to allow for a complying development under the NSW Housing Code. For those of you who are unaware, the NSW Housing Code is designed to both speed up and simplify the process for approving standard types of housing and allows you to bypass normal Council DA procedures.
The third step was to look at a few design options to look at what renovations could be done. Ie. Single storey extension, first floor addition. In doing so we work to produce a design that achieves their goals and investment returns for the least amount of cost. We also looked at which project homes could fit on the site to give a comparison of what they could have if that was indeed the best decision.
The fourth step was to meet with them and discuss one or two preferred renovation options to cost and also to select their preferred project home.
The fifth step involved internal and external sales analysis and research to determine what the current market value as well as the value of a renovated house and project home.
The sixth step was costing the design options and project home option.
The seventh step was running a financial analysis of each option to determine the best return on investment including the option of selling and buying another house that suited their needs.
We then produced a full report of our analysis along with our recommendation.
Needless to say this was extremely worthwhile for this family as they knew and understood all of the factors in the different scenarios and were able to make an informed property investment decision.