Build 2 new or renovate and extend??? VOTE IN POLL

Hey team,

Just picked up a site locally- 1000m2 corner block with an approved subdivision in place for 2x 500m2 blocks. (slightly abnormal for the area with all blocks around 750-1000m2)

Originally my plan was to knock the house down and build 2 new freestanding dwellings. However I am now seeing renovated houses on slightly smaller blocks hitting the market for some pretty high prices.

Looking to sell the site either way for some cash as the area doesn't rent well and is a high owner occ/ family area.

 

3 votes so far, don't hesitate people!

 

Assuming your figures are correct, an extra $50k to stay in the deal another 7 months sounds like a good deal to me.

 

what about doing a DA and sell?

 

Note that I'm not a developer, so this should not be taken as gospel.

The renovation approach would give you three quarters of the profit of the knockdown-rebuild, in less than half the time, and with a lower borrowing requirement.

That strikes me as a better rate of return on given time (you might be able to do two renos instead of one knockdown-rebuild), and less financial risk, as you'd be taking out a smaller loan. Furthermore, in six months we'll be getting into the spring market, which is a better selling time for property.

So overall it looks like renovation is a winner to me.

The other questions I'd also be asking would be:

1. Is the existing house interesting or different? If it's got some merit, maybe it's worth preserving in any case.
2. Could you subdivide the property with the house in situ?
3. What's the demand like for townhouses in your suburb?

There are a massive number of blocks being redeveloped as townhouses, and most of them aren't that attractive. I wonder if some suburbs are suffering from an oversupply, which could bite developers.

 

I agree, time loss is money loss.

Thats been my dilemma, but then I often hear property is all about the long game. Thats why its been really difficult to devise a plan forward.

Im sending some plans/ artist impressions and a build package to the agent in the area to see what the figures stack up like- Maybe I'm selling myself short with the rebuilds.

My only concern as stated was the extra financial risk and exposure for a further $50k. The area doesn't return a high rental yield, however has some great growth prospects.

Will keep thread updated.

 

Someone spent the money to get subdivision approval, and that likely played a part in why you bought it.
It really does come back to IF the old place already has some appeal ?
Then there is your longer term plans, did you intend to develop into 2 and sell both, or keep one ?
The 6 month flip is better on paper..........

 

If you renovate and sell, would you put the money into a new project? If so I would go the shorter term, otherwise if it will just sit in the bank, then why not make more longer term.