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Knock down rebuild scenario

Discussion in 'Property Finance' started by gman65, 27th Dec, 2015.

  1. gman65

    gman65 Well-Known Member

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    Location:
    Brisbane
    Current PPOR is about 60 years old, mostly fibro/asbestos, not energy efficient, and to bring it nicely up to date could cost quite a lot.

    At the moment trying to work out the numbers on how much/feasible it will be to knockdown and rebuild in the near future.

    Current estimated property valuation: $520k
    Loan remaining: $285k
    Estimated equity: $235k

    I’m guessing the house value is low at around $50k ? Leaving land value at around $470k.

    For the rebuild I’m estimating presently:

    Knockdown + other site prep costs: $50k
    New 2 story/4br build: $320k
    Total estimated final valuation: $750-800k

    But this is where I am confused where the final amount owing is calculated. Some established equity must be in the land, and some in the house? Where does it go?

    Any idea of how I would calculate the final loan owing after the build in this scenario?
     
  2. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    You have a loan of $285k, but would need $370k to knock down and build. Just add these up. That would give you a loan of $655k
     
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  3. Scott No Mates

    Scott No Mates Well-Known Member

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    Double check your end value with comparable new homes in the area.

    $655k loan on $800k would be marginal for 80% loan.
     
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  4. gman65

    gman65 Well-Known Member

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    Brisbane
    Thanks, gives me something to start with.

    Would be putting in some extra cash. Few places selling for that now in the suburb, and can always adjust the build to fit.
     
  5. Corey Batt

    Corey Batt Finance Strategist Business Plus Member

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    Adelaide, SA
    It'll all come down to the valuation - the on completion val's can be painful dependent on comparable rebuilds in the area, so you have to toe a fine line between building what you want, not overcapitalise OR under capitalise.