Renovate or sell PPOR

Hi all,

Just looking for some opinions on our situation and options we currently have available.

We bought our PPOR in Grange in Brisbane 3 years ago below market value and renovated. 2 kids later, we are now considering our options.

To finish the house to suit our longer term needs, we would need to build in underneath (its a qldr on a 405 block). While we could do this on a potential shoe string budget, we are reluctant to take on additional debt and so have been exploring the option of finishing it to sell. There are other factors that mean this doesn't feel like our "forever" house. We're early/mid thirties

We have had a number of agents through to value it in its current form and it has come back at high 800s to low 900s (currently 3 bedder). A number of newly constructed houses on our street (4 beds,405 blocks) have sold in the last 1-2 years for $1.3m. To finish our house to a similar spec would likely cost $200-$250k. To throw another consideration into the mix, one of the agents had actually come back with a Sydney client willing to pay $950k for something like ours.

So, our options
1. Sell now and bank $400k ($250k increase over 3 years)
2. Renovate for $200-250k, and sell for $1.3m (potentially bank $500k).

My gut is telling me to sell now as there is a lot we could do with that $400k. We have been discussing subdividing options, and i think that would give us a better return with less risk than completing the renovation.

Thoughts please?

Thanks in advance

 

I’m in the same situation, renovate or sell and move to another house.
Our calculations are showing a Reno would be the most cost effective scenario

 

When considering selling, be very wary of an agent who just happens to have someone prepared to pay xxx for your property.

Once you sign the agency form to sell, that person always seems to mysteriously lose interest.
Marg

 

We're also in a pretty similar situation (we may be neighbours in Grange).

Why do you think your current property is not your "forever" home? Selling/buying costs can be a killer if all you need is a few more rooms/living space. I've added up about $70k for us to move.. that goes a long way in a reno.

Without seeing your house, I can say with a lot of confidence $250k will not be enough to raise, build under and achieve a $1.3m result. Try $400k minimum to be the same spec as the new builds.

you could try building in 'stages', but if equity building is what you're after, subdivision may be the go? There's the inconvenience of not having a complete home for the better part of a year though?

 

How can you subdivide a 405m2 block?

 

Hi all, thanks for your replies

To clarify, we hadn't intended to subdivide our current property. Rather, use the proceeds from the sale of the property as it currently stands to fund the purchase of an 800m2 block to subsequently subdivide/develop. We would buy lot ($900k), subdivide ($100k), sell one lot ($550k) and build new ppor on the other ($500k). This would give us a finished 4 bed property, but with a smaller mortgage. Simply using existing equity to do so is likely to be limited by serviceability.

With regards build cost, i agree. We have already done the first stage at a cost of $200k. We think an additional $250k would be required to complete it. The house is legal height over 50% of the footprint and would only require local excavation of approx. 600mm at the front of the property.

Obviously, there's a bit of research to do with regards feasibility but looking to get feedback from experienced members

 

Don't forget to factor in Moving costs, rental and stamp duty

 

That's a pain if there is more excavating.. I think a retaining wall should be avoided at all costs, but unavoidable if you're not raising any higher. Other option is to offset the retaining wall from house to facilitate with drainage.

With 3 beds upstairs I'm guessing you'll lose one for an internal staircase? Unless you move the kitchen downstairs, you'll end up with 2 bed upstairs and 2 down with the Kitchen on the top level, which is not what folks look for in a $1.3m property.

Being in a similar situation (and in Grange), we are opting to stay put, save the buying/selling costs and using that for renovations. We've got a sloping site where we don't want to "lose $200k in the dirt" so we're extending out at the top level to gain 4bed, 2 bath, 2 living areas. Building under is a nightmare at our place, but we should still have a half decent backyard.

I'm not convinced a subdivision project is 'less risky'. Available sites are selling at a massive premium. Assuming you're still looking in Grange - I think it's $1m for a double block with a character house (more of a liability when doing a subdivision), and $1-1.2m which contains a knock down house. Unless you have a source of buying under market value?