Is doing a knock down rebuild a mistake?

[jman]

Hi All,

First of all, Merry Christmas!!!

At the moment we are in the mid of putting in an offer (Monday) for a property down in North Ryde and we were wondering if you guys would be able to shed some light on what we plan to do.

We are planning to buy a old 2 bedroom house in North Ryde for $800K then do a knock down rebuild for 400K.

This effectively brings the total cost up to $800+$30(stamp duty)+$400=$1.23M.

As this would be such a long process (sounds like a 2 year plan) we hope that the fall back plan would be that if we do loose our jobs and cant hold the property, we would be able to hang on till its fully built and sell it off at cost.

Do you think we will be able to sell it for $1.23M?

What do you also think of North Ryde area?

Also do you think Sydney property cycle is at 12pm(peak), 3pm(dropping), 6pm(bottom), 9pm(booming)?

We like it cause its 15 mins walk to the train.

 

[westminster]

What is your plan for it when completed? Sell, rent, PPOR.

I personally wouldn't do it for an IP but if its for your PPOR then it's a different scenario.

 

[westminster]

By the way don't forget holding cost for the 2 years.

I don't know north ryde but you can take your plans and specification to a local REA and get an appraisal done. Of course you can also look on re.com at similar properties and work out estimated value.

 

[devank]

Median value for North Ryde is about $800-850K. So if you are buying a median house then why do you want to knock it down?

Like westminster said, if it is a PPOR and if you can't find a property you need/want then that is fine in my books.

 

[jman]

Yeah, the houses we looked at were commanding the 1.2 to 1.4 mark.
The plan is to leave it as an ip until we are ready to knock down, have plans approved and builder is ready. Will be our ppor once its built.

We just want to be sure an safe guard ourselves just in the event that we have to sell.

Agents are saying 1.2 and up is the norm for a post 2000 built house.

We looked at it this way, please don't scream at me =)
Kellyville 800k
Baulkham hills 950k
Castle hill 1.1m
Epping 1.45m
North ryde should be worth 1.2m?

How does one gauge the land value of the property?

We heard of stories where people paid 1m for a house in Kellyville and when they eventually sell it, it's only worth 850k.

We just don't want to end up like that.

 

[Shahin_Afarin]

2 questions - have you considered if you are able to construct 2 dwellings on the block of land? Also when you say $400k to build, what exactly have you factored in and what type of house are you building? Total construction for a 2 storey 5 bedroom house can range from $300k and upwards.

The neighbours across the road finished building their 5 bedroom house and it cost them $1.2mil to build and that didn't include landscaping and the alfresco area. Just make sure you do your numbers and that the sources are reliable and that you are adding fat on top of the quotes.

 

[jman]

2 questions - have you considered if you are able to construct 2 dwellings on the block of land? Also when you say $400k to build, what exactly have you factored in and what type of house are you building? Total construction for a 2 storey 5 bedroom house can range from $300k and upwards.

The neighbours across the road finished building their 5 bedroom house and it cost them $1.2mil to build and that didn't include landscaping and the alfresco area. Just make sure you do your numbers and that the sources are reliable and that you are adding fat on top of the quotes.

This is what we calculated.
Building cost with allcastle $290k
Demolishing $20k
Drive way $10k
Landscape $10k
Safety net $70k

 

[westminster]

You do need to ensure that the bank will allow you to demolish the house to build the new house as for a period of time the Loan to Value Ratio will change when there is no income coming in and the current house is gone reverting to land value only.

Finishing off a house costs anywhere between 50-100k - floor coverings, landscaping, curtains/blinds etc all add up.

Oh and don't forget demolition costs. And demolition application, building application fees for local council.

 

[jman]

You do need to ensure that the bank will allow you to demolish the house to build the new house as for a period of time the Loan to Value Ratio will change when there is no income coming in and the current house is gone reverting to land value only.

Finishing off a house costs anywhere between 50-100k - floor coverings, landscaping, curtains/blinds etc all add up.

Oh and don't forget demolition costs. And demolition application, building application fees for local council.

yep. the package we looked at with all castle includes floor coverings.
we are thinking that the 70K will cover any extras we missed out on and if we have any spare we might consider putting in a pool.

 

[Shahin_Afarin]

Your numbers are ok including demolishing. The thing you are missing though is a ton of other costs including but not limited to DA and council fees, fencing, concreting (not just driveway), rainwater tanks, stormwater drainage and site costs (excavation, flat surface? sloped?). Then on top of all these costs add your $70k.

 

[Shahin_Afarin]

Also expect to be taken for a ride for a lot of quotes you get based on where you live. Get solid recommendations on good tradespeople (that includes excavators, demolishing guys, etc).

 

[jman]

Your numbers are ok including demolishing. The thing you are missing though is a ton of other costs including but not limited to DA and council fees, fencing, concreting (not just driveway), rainwater tanks, stormwater drainage and site costs (excavation, flat surface? sloped?). Then on top of all these costs add your $70k.

Hi,
u are scaring me!!!

We spoke to them and they said all these were included minus fencing, driveway landscaping and demolishing.

The plus plus were based on sloping land and stuff..

http://www.allcastlehomes.com.au/pdf/allcastle_pricelist_sydney.pdf

Can you look through page 5 and see if they are missing any inclusions?

we plan to build a grandworth 35 listed as $290K on page 8.

 

[Shahin_Afarin]

Sorry mate the intention isn't to scare you. All good re what they have included in the site cost. The only thing I would try (it will be close to impossible though) to find out is if you need rock excavation. This is dependent on the levels which you will not know until the plans are drawn up.

Also this is a price list - try getting a building tender that will list specifically what you are getting. However based on what you have sent - the price clearly does not include driveway, concreting, retaining walls, landscaping, fencing, stormwater drainage.

 

[jman]

Sorry mate the intention isn't to scare you. All good re what they have included in the site cost. The only thing I would try (it will be close to impossible though) to find out is if you need rock excavation. This is dependent on the levels which you will not know until the plans are drawn up.

Also this is a price list - try getting a building tender that will list specifically what you are getting. However based on what you have sent - the price clearly does not include driveway, concreting, retaining walls, landscaping, fencing, stormwater drainage.

Mate its good that you are telling me things in advance. Appreciate that!
Would you be able to provide a rough estimate based your experience on how much each of the things u mentioned will cost? I am still alittle confused with concreting though the package includes the concreting of the house and I would assume the other part of concreting would be the driveway?

 

[Shahin_Afarin]

The building tender would most likely include the slab not any concreting on the side/back or front of the house. All the below costs are approximates without even seeing the site but should give you a ballpark idea:

Driveway - $10k minimum depending on the type of concreting you need, depth and length. If possible talk to the concreter and the builder to see if you can do all the concreting in one go rather than later on. This will save you money when the concreter is doing the slab. If the trucks will need to use the driveway as the only access to the property then do the driveway later as the trucks will damage the concreting on the driveway.

Concreting: $7k again depends on the volume but this is a smaller average figure

Retaining walls: This is a tough one because it depends on how much if any is required, materials, height, length, etc.

Landscaping: $10k

Fencing: $5-$10k

Stormwater drainage: $15k-$25k depending on a bunch of things.

DA: Again a tough one but it could cost anywhere from $5,000 to $20,000

Also contact your council and find out what the contribution costs are.

 

[chilliblue]

Remember to also price up all the little items such as tv/internet connection, telephone connection, window coverings, extra power points, flyscreens

It will all start to add up.

 

[vmclee]

Remember to also price up all the little items such as tv/internet connection, telephone connection, window coverings, extra power points, flyscreens

It will all start to add up.

Agreed, it sure will add up.

Last build we did, we had an extra $110k of necessary expenses (internally, externally and additional ground work)

 

[beachgurl]

The additional costs will really depend on whether you want it to be your home or just a house. Last year, we built a house. Our intention was to keep everything at base levels so we didn't incur additional costs. We still had to pay additional costs for the basic electrical and BASIX. To have a double powerpoint in each room, sufficient light fittings through the house, external lights and dual light switches for the stairs cost us 2.5K. You may find that your landscaping budget may not be enough either.

This time around, we are building a home, but it will also be high end for our estate so we need to have a quality home to fit in with the others and for good resale. The extras we will need include:

additional powerpoints for the kitchen
double powerpoints per room
tv points (most builders only give you one)
phone points (same as above)
floor to ceiling tiling
upgraded tiles through the house
upgraded kitchen to c/stone benchtop, poly doors and 900mm oven, upgraded rangehood
locks on bathroom doors
double towel rails
upgraded internal doors and handles
upgraded front door

These are just the basics. Most builders won't show a home that has the basic fixtures and fittings as it looks pretty average.

Builders like the one you are going with have a low base price but don't include a lot of things that you would think are included. Some of the more premium project builders charge a fixed price tender and while it looks much more expensive on paper, by the time you have your colour selection meeting you may find they end up being cheaper. Nothing worse than receiving post contract variations cos the builder has decided the price has gone up or you find that something you thought was included actually wasn't.

My one big recommendation to you is to get 3 tenders. Most cost around the $900-950 mark. You won't get proper answers to your questions unless you get a tender and as you can't compare apples with apples you have no idea what you are getting in terms of value. First time around we just got one tender as we didn't want to spend money on more. Second time around we got 3 tenders. We created a full list of inclusions we wanted. For some builders, these inclusions were part of their base package and for others they were expensive additions. Some builders will give you a 1K rebate to get the job if you show them a tender deposit receipt from another builder.

Also ask about time frames. It's great if you find a builder that has a very low price, but not if they only give you 4months to sign the contract or the price increases (this is the case with another builder starting with A), which is a timeframe which no one ever meets as contracts aren't signed until after council approval, or they have a 10 month build time in comparison to others' 6 month build time. Also try to find out if the builder has internal or external draftspeople. This may vary your lead time to council by up to 6 months. Our first builder had external drafties so each variation however minor required them to pay a fee to a contractor and took around 3 weeks to complete. Internal drafties can turn things around within days. these differences in time cost money - factoring in double loan repayments on your current home and the one you are building it can be many thousands.

I'd suggest you look at the homeone forum and read the Product Review websites for opinions on builders. Better to be educated now than wish you had down the track.

 

[devank]

Building cost with allcastle $290k

Allcastle was professional and reasonable in their dealings. They are one of the better project builders. Having said that everything depends on the supervisor you get.

We built a 382 sqm house in 2009 with them.

Here are the summary of our expense.
Demolition- $12,740.00 - 3%
Allcastle Homes - $356,658.00 - 71%
Drainage - $36,590.00 - 7%
Landscape - $59,033.53 - 12%
Fittings - $28,725.00 - 6%
Miscellaneous - $5,870.67 - 1%

Basically, spent about 150K on other than the actual building.

Here is the builder breakdown.
Base price - 232K
Site cost - 31K
Council - 13K
Variations - 60K

Drainage cost includes (thanks to the Strathfield council) two rainwater tanks, 10sqm retention tank and 2x10m absorption trenches!

Here is the breakdown of landscaping cost (Not 100% exact.. but close):
Plans & designs - $3,200.00
Synthetic Grass - $10,000.00
Turf & landscape - $3,630
Driveway - $6,940.00
External Driveway - $4,200.00
Public footpath - $750.00
Paving - $2,000.00
Deck - $6,000.00
Fence - $4,530.00
Automatic Slide Gate - $4,250
Side Gates - $1,000.00
Retaining wall - $2,805.00
Extra bricks - $2,310.00
Gyprock - $1,078.00
Garden Shed + Base - $1,250.00
Remove and fill garden soil - $2,000.00
Security Doors - $2,100.00
Other - $1,000.00

Here is the breakdown of fittings costs:
Flooring-$18, 600 (mix of Floating timber & carpet)
Wardrobe-$6,700
Lightings & extra wireing- $4,900
Blinds-$2,500

I think this should give you some real feel of building cost

 

[Notaras]

Yeah, the houses we looked at were commanding the 1.2 to 1.4 mark.
The plan is to leave it as an ip until we are ready to knock down, have plans approved and builder is ready. Will be our ppor once its built.

We just want to be sure an safe guard ourselves just in the event that we have to sell.

Agents are saying 1.2 and up is the norm for a post 2000 built house.

We looked at it this way, please don't scream at me =)
Kellyville 800k
Baulkham hills 950k
Castle hill 1.1m
Epping 1.45m
North ryde should be worth 1.2m?

How does one gauge the land value of the property?

We heard of stories where people paid 1m for a house in Kellyville and when they eventually sell it, it's only worth 850k.

We just don't want to end up like that.

.
Re: Kellyville I think that sounds like my brother in law. Ultimately if you are going to buy anything especially that far out you must be able to comfortably hold on to it for as long as possible. Watch out for claims about values and if you are going to spend big bucks spend a few hundred bucks on a property valuation.