Hi All,
Just after some advice/opinions. I own a property in the inner west of Melbourne. Currently has a Weatherboard dwelling in a pretty bad state.
I'm in 2 minds weather to completely renovate – would need basically everything done including plumbing, rewiring, roof, plaster new kitchen , bathroom u name it. Or the other option is to build possibly 2 townhouses on the land. Land size is not the best 12.5w by 45 long.
Not sure which option is the best – the intention is not to sell with either option. So far pros for renno is – basically renovated weatherboard house which tend to keep there value in this area. Cons would be cost would basically be around $220K mark for complete Reno which also most could be brand new dwelling.
Pro's for new build x2 townhouses – Brand new dwellings x2. Cons – Cost and not sure it would increase equity that much more given cost.
Appreciate any advice
$220K for a reno? What, are you ripping it all down and starting again? That's crazy!
Based on your limited information it's impossible to say which is better. We don't know the area, what is in demand there, sell prices, build prices etc etc.
Numbers talk and you've given next to none.
You need value now + reno = value after.
Then
Value now + cost of demolish + building townhouses = value after.
THEN you will know which is best. At the moment I think you are just guessing.
Good luck with your research.
Agreed with Catalyst – that's crazy money for a reno. You could almost put up a new house for that.
To put into perspective, I've just carried out a pretty major reno on the PPOR – almost everything but the bathrooms, added a nice big deck and there was quite a lot of structural changes. It's cost around the $50k mark – if it was an IP, we would have done it a fair bit cheaper.
The only work I've done is a bit of painting.
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone MeMortgage Broker assisting clients Australia wide Email: [email protected]
220k for a reno. You would have to of bought significantly well below market value and or have a huge suburb variance between sale prices of un-renovated and renovated dwellings. Only really possible on million dollar sale prices. IM not saying its impossible not to make money.
But if your spending 220k to renovate, that is excessive (unless its a million dollar sale price plus- please tell us)
220k could be a up market 3-4 bed double storey home depending on the level of finish.
Add another 25k for subdivisions 5-10k planning and 10k demolishing some holding costs (hard to guess without your loan amounts or if there is any) AND another 220k for the opposite side of the duplex.
You can quickly see here that for a additional (265k plus holding costs) plus the 220k for the other side of the duplex, You could end up with a another dwelling. You now have to Do you numbers and research the following
– What can you build the site. each frontage is going to be 6.75m wide which means getting your design correct.
– How many bedrooms for the new properties
– Comparable sales for brand new houses
– Comparable sales for a renovated property (from experience i can tell you that all things being equal, area, location, street, bedrooms, quality) that a new home will sell for more. Unless the existing renovated property has wanted characteristics, think Victorian, Edwardian, terrace housing. Properties that to emulate the level of detail these days is unaffordable. People always love things that a new and shiny.
– building new means that floor plans are usually better designed and functional, unless modifying the existing floor plan.
Dear FIGC,
My name is Hari Yellina, Property investor. My story of renovating.
1 year ago, I have renovated a house in West Footscray. It has in such a bad condition.
Property
- Weather board
- 5 bedroom
- 60 years old
Renovations done
- New carpet whole house
- New floating floor boards in common areas
- Internal painting
- External painting
- Roof painting
- New toilets
- Holes in the bathroom
- Holes in the house
- Front yard and back yard clean up. (i had 8 tress)
- Cupboards clean up
- Fixed all the broken glass doors.
Your name it pretty much done everything for the house. Not is is tenanted since and the tenants have signed one more year lease, It looks like such a pretty place now.
Total cost was $32K
Please confirm $220 k. Might be a bit expensive. Please post us more information.
Thank you so much
Kind Regards
Hari Yellina
Property Investor.
Hari Yellina
Email MeKeep Investing - Grow while Resting.
Hi all. After meeting with a couple of carpenters/builders they were shocked with state of property. Front of house is ok…. Back which includes kitchen, bathroom is pretty much right off and floor joists also need to be replaced.
Looks like will will need min $70k to get somewhat up to scratch and $100k for better result.
question is given location inner west. Land alone would be worth $550k. Is it worth throwing $70-$100k at it ?
Other option is x2 quality town houses @$330-$350k each build cost+approx $50k for plans,
and demo costs. Would be tight given land width approx $12.5 wide however >40 meter depth. Have been told by some designers two side by side with street frontage and front garage is possible. Not sure end result $equity would be worth it compared with $ Reno and end value.
50k for plans and demo costs is also excessive. For 2 dwellings. I'm not going to kid but that money could get approval for 40 dwellings. If all relatively the same. Which your design would be a mirror of one another. Unless these are some very detailed drawings and high end high spec builds. I would look to hire the services independtly of paying a single company/ builder.
Well at least you know what you have to do now
How much is your original house going to be worth with a 70-100k Reno. If it's not worth at least 100k plus more…. Don't do it. Common sense your not making money.
and figure out the end sale price of whatever dwelling you are putting on there. But a 4 bed 2 bath wouldn't be out of the question which is what I would expect for a build costing 330k each
Work out
– timeframes
– interest costs whilst not available for rent
– if you could service a construction loan of 700k for the build.
– If you have the money for the build or Reno.
$50K included council fees, demo, plans and permits etc.
I have decided against this as finances would be to stretched.
the house is almost a writeoff but can be salvaged with $100K
I would demolish the existing house and get plans and permits done. $50K
Find a builder that will charge $1200-1300 per sqm and build two 160 sqm town houses. $220000 each.
Plus land purchase cost.
Plus add 5% as a holding cost of the total project cost.
How much can you sell each town house for?
All of this is good advice assuming that when you demolish the property you have sufficient cash reserves as your lender will only lend against land value.
If your initial loan was based on the purchase price / valuation then you may be in for a financial shock.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
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