For most people taking the first step onto the property ladder, or looking to move up a step or two, then buying a new build property is usually not an option. This is especially true in the more expensive, developed parts of Australia such as Melbourne and Sydney. In these cases, people looking to leverage their current assets to procure a new home have two main choices, renovation or rebuilding. Let’s take a look at these.
Renovating an Existing Property
This is a tried and tested way to use current assets to procure a better or larger property. Here the trick is to find a perfect property that offers a good potential for renovation but is priced competitively. We are aiming to take the initial purchase cost, plus the cost of renovation and turn the property into something that is worth more. But there are pros and cons to this approach, so let’s compare them.
Pros of Renovating a Property
There are some real plus points to renovating an older property. The most important of which is that you can still live in it while you are renovating it. There is no deadline or time consideration, you can take as long as you need to complete the renovation. You can also spread the cost of the renovation out, you won’t need to have all the cash available from the outset.
Cons of Renovating a Property
If you are a family with young children, then living in a house that is being renovated can be difficult. It can also be dangerous. Children aside, it is also uncomfortable to live in a partially renovated home. A renovation can also drag on, despite our best intentions. And there is always a risk of the cost of renovation spiraling out of control.
Rebuilding an Existing Property
Knocking down and rebuilding a dilapidated property can be a very good way to obtain a great home in an expensive area such as Sydney or Melbourne. In this case, we are really only interested in the land and the already approved planning commission. We look for older, probably disused or very run down properties that are being sold cheaply, and turn them into a new home.
Pros of Rebuilding a Property
The main benefit of taking the rebuild route is that you can build the exact home you want. It will also be a brand-new home, not an older property with potentially expensive ongoing maintenance costs due to age. If you get the right bargain, you can build the home you want, where you want it, at a lower cost than buying a new build in the same area.
Cons of Rebuilding a Property
The single largest downside to knocking down and rebuilding a house is that whilst the rebuild is taking place, you can’t live in it. You will need to find alternative accommodation until it is rebuilt. This, of course, will add to the overall expense of the project. There is also a danger that timescale can slip, and the rebuild ends up taking far longer than expected.