Browse Forums Renovation + Home Improvement 1 May 11, 2021 10:52 pm I'm trying to figure out if a knock-down rebuild would be a cost effective option for my family compared to buying a new home. Our original plan was to sell this property and buy a new one. I think we could get about $450k for this house because of location... the house itself is a "renovator's delight" and has so much work that needs doing! But we'd need $1M+ to get the kind of house that we actually want to live in in the suburbs we want... probably closer to $1.5M. I've been house hunting this year and getting fed up with what is available on the market and the somewhat exorbitant prices. Our main reason for wanting a new home is to having something nicer to live in (this house needs so many repairs), that would support our family of 6 and our home business. We also wanted to move closer to the kid's school (20-30min away) but that has become secondary now since prices are so crazy and my kids seem content to catch the bus to/from school So, now I am considering knock-down and rebuild. At first I thought the task would result in a loss... surely this bomb of a house has some value (say $50k) so knocking it down would essentially be like throwing that money away... is that the right way to think about it? But otherwise, the brief research I've done on KDR seems like we could get a really nice house for considerably less than buying a new one... we could get basically exactly what we'd want and save time and money selling this house. I actually love this area where we live and fairly content with my block size (approx 800m2). The land was just not well utilized and the house layout is horrible... e.g. I have to leave the house to access my downstairs laundry, we don't have internal stairs. But if we could start again I think we could create something really awesome. So, could someone help me figure out how to assess if this endeavor is cost effective compared to buying a house? Like I said, I think we could get $450k if we sold this house. But it would cost us probably at least $1.2M to buy the nicer kind of house that we wanted with the features we are also happy. I think we could make something really nice for $500k-600k... so wouldn't that be like a much smaller spend in the long run?? Thanks in advance! Re: Cost of Knock Down Rebuild vs Buying New House ? 2May 18, 2021 2:32 pm We are in the final planning stages of KDR in Perth. We actually bought the land with that in mind - didn't want to stretch the mortgage to get house and land so bought a craptacular house in a great spot. Others will probably be able to add more, but I think you need to do some quotes yourself for each option - flesh each out with all the extra costs. Look at some displays where you like size and style and see the cost. It seems you can drift by 100k just with spec! You can get a valuer to look at your place, or do your own checks. When we bought here I looked at all the sales history for the last 18 months and what you got (land, crap house, great house) and you quickly learn what the $/sm for land is. Funnily enough, people seem to balk at places that can be knocked down rather cheaply - the amount of times a vacant block sells for 50k more than the house down the street that can be demo'd for 15k suprised me! You may lose some theoretical money if you knock a house worth 50k down, but you will pay 46k stamp duty and transfer fee on 1.2m in QLD, plus whatever it costs to sell your place which you lose when you buy and sell. If you don't have a friend/family to move in with (and with a family of 6 that's probably likely..!) you are up for rent for however long it takes to built. That assumes you can't build the house in a different part of the block and live in the old one while the new one gets built (probably unlikely unless the old house is placed weird on the block). Would designing your own place be something of interest? Some people shudder at the thought, others embrace it. My guess is the difference would be enormous, and over the next 20 years could be negligible. You could find that the desire to make your own and stay where you are (big plusses for us) will be more of a driving factor than price? Also, are the 1.2m places in a different area where land is worth more? Or are they bigger blocks? Otherwise it seems weird that your place is worth 450k land value and a dream house is worth 1.2m - are they really ~700k+ houses or are there other differences? We've had the offer of a short term tenant whilst waiting for CDC/DA home approval and demolition for our knock down rebuild. 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