To build or to renovate, that is the question.
Depending on the state of your property, it might be more cost effective to knock it down and build a new rather than renovating it. Here are some considerations that should guide your decision.
How much is it going to cost?
If you're planning to make a lot of renovations that involves structural changes, in most cases it's cheaper to knock it down and start from scratch. According to renovation expert Mathew Bell from Ausbuild Queensland, a brand, new single storey home would cost around $200,000 and a two story, around $250,000. However, estimating the cost of building a new home is incredible difficult due to unforeseen circumstances. To avoid this from happening, you could opt for a fixed price contract.
How old is the property?
If you bought the property for it's vintage decor and structure, then it might be more effect to renovate instead. Although it will cost more, it will defeat the purpose of buying the property in the first place if you're going to build it from scratch.
Where is the property located?
Knowing the potential value you can add your property by renovating or building is also a major consideration. Knocking down the property and building a new one makes more sense if land is scarce in the area. This includes areas that are near the Central Business District or the beach. It could potentially increase the property's and so reduces the risk of over capitalising. If you're not sure how your area will perform, consult a real estate or buyers agent to see how much your land is worth. Remember to also speak to your local council to see what building regulations apply to you.
Know what your maintenance and ongoing costs will be after the renovation/building
New buildings are a lot easier to look after, as they're less exposed to insects and tend to use new technology. Try to find a construction company that offers extended warranty on their homes, in case anything happens. Be mindful that renovating a property could still mean that your existing problems are still there and in the end, you may need to knock it all down and build a new place anyway.
Doing the maths for the future
If you are planning to stay in your home for less than five years, except for painting and other low-scale cosmetic touch-ups, when you decide to sell you will stand to recoup only about 50% of the cost of any renovations you may do. With kitchen and bath updates, you may recoup about 75% of your cost. Of course, you may have to redo the kitchen or bath just to ensure that you are able to sell a house in need of those renovations. So they may be necessary regardless. But, if you are going to be moving before five years are up, you'll come out ahead, or at least break even, by just redoing the painting, landscaping, or making other cosmetic enhancements.
Other considerations around your decision
- How much is the land itself worth?
- How well-built is the present house?
- What is the present worth of the house?
- How much money do you have to spend?
- Are you trying to make a silk purse out of a sow's ear?
- How much renovation will you need to make it comfortable?
- How much experience do you have with renovation and design?
- Will renovating a house place it out of the range of other homes nearby?
- What's the state of major systems in the house – heating, plumbing, electrical?
You and your significant other will have to sit down, decide what you want to do, and then call in a number of contractors and get some estimates. At this point, or sometime soon thereafter, you will have to decide if you will need an architect or if a skilled contractor is competent enough to draw up the design of the renovation. A room addition, redoing the bath, or some other relatively minor operation may not require an architect.
Four biggest fears of renovation
Renovation produces some awe-inspiring fortitude in the human spirit and some awe-inspiring degradations in the human character. The four biggest ordeals in any renovation include:
One website concerned with renovation vs building anew has this caveat:“Major renovations are stressful and some marriages have not survived the process.” Having to put up with a major readjustment in your daily routines and habits is hard to endure.
Sidestepping mud, dealing with missing walls, or scaling piled up boards after you come home from a hard day at work is no fun. As you can imagine, renovations during inclement or winter weather presents a unique set of problems. Imagine putting up with messes for any number of weeks, depending on the job.
No matter how carefully planned or well-thought out, there will be setbacks. Wiring assumed good will be frayed. Plumbing will burst. Materials will not arrive on time or be something other than what was ordered. If you are familiar with a certain Mr. Murphy, you must know that he will be present and enforcing his law during any renovation, large or small. And his stay is usually expensive.
You can and should check out references on any contractor you may be inclined to hire. Check the local chambers of commerce or better business bureaus to see if anything bad has been lodged against the contractor. You may find a great contractor, but what if he hires poor sub-contractors? Hope for and search for the best, expect the worse.
If your property is ideally located and you love the neighbourhood, building anew could be your best bet. It may be easier than an extensive renovation in terms of stress and affecting your lifestyle. You will simply have to find a temporary residence. Keep in mind that getting a house built within six months is about the best that can happen. You will also need to employ the services of a architect if you want a truly custom home or if you are seeking to alter store-bought house plans.