The biggest question that often faces potential homebuyers is whether I should build new or renovate? Although personal taste and lifestyle are major contributing factors, finance is often the most significant player in the new home or renovation game.
There are many hidden costs to buying a home to consider, along with some other significant factors that we’ll list below.
New build vs. renovation
Deciding between renovating or building a new home is unique for everyone.
There are so many things to consider, including:
- Financial position
- Amount of personal involvement in the project
- Predictability of extra costs
- Length of time the project will take to finish
- The properties location
- Surrounding schools, facilities, utilities, and much more
These are only a few factors that come into play, making the build or renovate conundrum potentially one of the most stressful questions you ever ask yourself.
So, is it best to contact a builder, speak to a real estate agent, or armor up for the often epic DIY renovation journey? Read on to learn more.
New build pros and cons
There are a few ways that can approach building a new home. Either you are acquiring a new block of land, say in a new development, or you are purchasing land in an established area, which may or may not have an existing property on it.
There are pros and cons to all of these options, and there are many ways this can play out.
However, the real estate game will always ring true: location, location, location! Every savvy real estate professional has this mantra.
An off-the-plan home in new property development is often your most affordable and stress-free option. The price is usually fixed, all utilities and fixtures are brand new, and you may not have to worry about a thing after moving in for years to come.
For many, this means a fresh start in a new community. However, this option will likely take longer to rise in value from a financial perspective. Why? The land will always be your biggest asset, and a new area takes time to gain value.
However, if you have done your homework, received advice from reliable real estate agents, and plan to live in or rent the home for an extended period, a new home can be a real winner.
New home on old land
Although this option may cost you significantly more up-front, you may see more immediate returns on your investment so long as you have found a block of land in an established sought-after location.
However, success will depend on one of two things; can you afford the up-front cost, or will a lender provide you with the necessary capital to make it happen?
Demolish and rebuild
It’s often advised that the savviest way to invest in residential property is to buy the worst house on the best street, and this also applies to the ‘knockdown and rebuild‘ model.
This option shares many of the same pros and cons of building in an established community; however, the project has a significant added cost. Demolition is more of an artform than you may think, and it doesn’t come cheap, potentially adding tens of thousands of dollars to the final bill.
However, the location of your new home may all make that worthwhile when it comes to getting another bank loan in the future or when you decide to sell up.
There are two reasons people renovate, and it’s never been easier to renovate than here in the US. Number one is that they have found the bones of their dream home in their desired location. Or number two, they have found a land and house bargain in a sought-after area that can make significant returns in the renovate and resell or rental game.
Renovating an old home can be one of the most rewarding things you can accomplish in life. Seeing a once outdated or dilapidated property transform into a sparkling new abode.
However, of all the options discussed in this article, this may be the riskiest so far as financial predictability is concerned. However, all this can be worth it if the location, location model is applied.
Renovating the worst house in the best street, especially in a popular, sought-after location, can significantly improve your financial asset portfolio.