June 03, 2019 Renovate, detonate or move?!
Let’s face it, renovating or knocking down a house is a daunting proposition. Whichever way you look at it, it’s a huge decision. Same goes for selling up and the arduous task of then moving, particularly if you’ve been living in the same spot for a while.
Many families arrive at a point where their home doesn’t quite meet their needs anymore. It could be a lack of space. The house itself might be feeling a little long in the tooth and not be up to par with your lifestyle. There can be a multitude of reasons.
Regardless of the driver, it’s a huge decision to make. Even more so if you love the area where you live and have a bunch of friends and family close by.
Let’s have a look at both the lifestyle considerations and costs for renovating a house, doing a knock down and rebuild, as well as going, hey, it’s all too hard, I’m just going to sell my house and buy the house I that’s going to better suit my needs in another area.
Renovating a house
Since the advent of shows such as The Block and House Rules, there’s been a huge appetite for home renovations. It’s almost become a national obsession. Pop down to your local Bunnings first thing Saturday morning, and you’ll see what I mean.
If my family ever reached a point where our family home no longer met our needs, there are a raft of things that’d steer us towards renovating or doing a knockdown, as opposed to selling up. I’m talking nostalgia, mainly – the house, the neighbourhood, the local community. Without making it out like an episode of Cheers, there’s a lot to be said for the barista at your local coffee haunt knowing your name and coffee order and being walking distance from great school for the kids. It’d be hard to give up.
In my mind, the beauty of renovating a house is that you get to build bespoke specific to your family’s needs. And hey, you know the house inside out, so you know precisely what you need to do to get the design right to ensure that it best suits your family’s needs.
The cost of renovations we tend to see through Orange Wealth varies pretty widely – starting at around the $150K mark and up to around $600K. It all depends on what you’re looking to achieve and the spec.
And that’s just the cost of the renovation itself.
The other financial considerations you need to factor in include the cost of renting another property while you’re renovating, potential storage costs and, if you’re well versed in all the Grand Designs episodes, nine times out of 10, chances are you’ll cop a few budget-draining surprises with the building during the renovation process. Oh, and before I forget, then there’s the cost of new furniture – everyone wants new furniture for their new home.
Lifestyle considerations aside, one of the biggest advantages of renovating your house over, say, selling up, is that you won’t have to pay agent fees, stamp duty and other costs associated with selling your home.
Knockdown and rebuild
Sometimes there’s an inescapable gulf between the canvass that is your current house and your dream home. Other times, it can actually be cheaper to knock down and rebuild rather than renovate. Then there’s the attraction of living in a brand-spanking-new house.
As with renovating, it makes absolute sense to knock down and rebuild if you love the area, have all the amenities you need and friends and family close by, and would rather a brand-new house over renovating.
Design wise, you have plenty of options. Beyond going absolutely bespoke, you’d be surprised just how close you can get by going the pre-designed home option. Friends went this way recently, and I was blown away by just how much they could tailor everything to get as close to their needs as possible.
When it comes to building a house from scratch, how long is a piece of string, right?! From our experience, the rebuilds we tend to see sit at around $450K at the lower end of the spectrum, then up around $1m at the other.
If you go with a reputable builder, there’s a fair chance you’ll be able to set a fixed-price contract. This is important, as costs can quickly spiral out of control when it comes to building a home – and there are plenty of horror stories out there. If you can’t set a fixed price, expect a few surprises during the process and potential cost blowouts. It happens.
You’ll also have pretty much all the same peripheral costs as renovating, as outlined above. In saying that, a rebuild can take significantly longer than renovating, so you can expect to be renting for longer.
On a very positive note, though, the value of your home can shoot up pretty dramatically, post-build, depending on the design and specs, obviously.
Sell up and move
As I’ve alluded to, the decision to renovate your house or knock down and rebuild isn’t for the faint-hearted. The time, the stress, the potential for costly errors – it’s not for everyone. Rather, sometimes outgrowing your home can be a great opportunity to get what you want, where you want.
If you’re not wedded to the area you’re in, possibly the biggest consideration is having the chance to buy closer to where you want to be in terms of work, community, schools, and friends and family.
You also don’t have to deal with the time, stress and headaches that invariably come with building or renovating. Better still, you can see precisely what you’re buying. The flip-side is our dream home often costs more than we can afford, and selling your existing home can be a pretty stressful, emotional experience, particularly in today’s market.
Possibly the biggest plus is that you’re dealing with a known price and, provided you get a sound, robust building assessment is done prior to purchasing, you’ll likely won’t get hit with too many surprises.
In terms of selling your home and buying another, you can expect your transaction costs to be around the seven percent mark. That’s ballpark, obviously, but a good guide, nonetheless.
Thinking of renovating, rebuilding or selling up for somewhere bigger? Here are a few tips to consider…
– If you’re renovating, you can use the equity in your current home to get the money upfront
– If you’re rebuilding, you’ll need to get everything valued (all the plans and technical specifications) and then meet all the equity and serviceability requirements
– If you’re buying new, it’s simpler, 1 transaction based often on what you bought the property for. Pre-approval means you know what you can buy and is a more typical funding process.
If there’s anything in particular need to know, book in a 15-minute chat below, and we can go from there.
Disclaimer: all information contained within this article is of a general nature. It does not take into consideration your personal financial circumstances. Please consult a professional financial adviser (just like us ) when making a financial decision.