Renovate vs. Detonate: When is Rebuilding the Right Call?
It is among the universal truths of real estate that, expensive as the market has become, home buyers will always be on the hunt for a bargain. Usually, getting your hands on your dream home for cheap means compromising on something, like buying a big house out in the bush, or a tiny flat in the city. But if you’ve been looking at listings lately you’ll notice a surge in listings marked “Renovate or Detonate”; it is this trend which shows the popular plan for saving money on your home in 2016.
Buy one home, rent out three
The implication being made by these listings is that a buyer will be much more interested in the land – the house can be either renovated or completely knocked down (“detonated”) to make way for new development. This may be because of the poor condition of the house, but not always. Land today is so expensive that real estate leaders will often recommend demolishing any single home and filling the block with units to get a proper return on cost. The more expensive the area, the more attractive this sort of “detonate” move becomes, as no single investment home will be capable of generating an equivalent income.
Self-detonation can be a genius move
Prospective buyers and investors shouldn’t be the only ones mulling over this difficult decision. Many homeowners looking to sell their house do so because “it’s not the right home for us” and they need to move on to greener pastures. But moving entails a lot of extra costs: moving expenses, stamp duty, conveyancing fees, and more. Sometimes when you outgrow your house it makes more financial sense to just knock it down and rebuild. You can hold onto your equity in the land, as well as your less tangible investment in your local community. Consult with your estate agents and builders before selling your home to see if just detonating it could be right instead.
Always be aware of the rules
When it comes down to the wire on a renovate or detonate decision, red tape often becomes the deciding factor. Different council laws and locations will impose different restrictions and require different permits depending on the extent of the work. If you can save yourself months of review and the risk of council sanctions by renovating a home’s interior and leaving the exterior untouched, to detonate seems a less attractive option. Renovation experts or local legal workers will be able to advise you on this if you’re uncertain.