Keep the house or demolish and subdivide?

[Joely]

Hi everyone,

I'm new to the forum and this is my first post so be nice . Not sure if this is the right place to post this, but I'm just seeking some advice regarding what I should do with a house we currently own in Adelaide. This will be quite a bit of information so I hope that is ok.

The home is situated on block of land approximately 1200 sqm with a 30 metre frontage. The property is located in the Adelaide suburb of Kensington Gardens, which is a fairly nice, leafy suburb in Adelaide's east. The house itself was built sometime in the 1970s however it doesn't look it. The facade is what I would best describe as a Spanish Mediterranean style with cream rendered walls, arched verandas and a terracotta roof. The streetscape is dominated by two sets of electric gates at either end of the property. It's really quite pretty. The interior is another story. It is very dated with typical 70s wallpaper, brown patterned carpet and dated light fittings. The roof leaks when it rains and the airconditioner system needs replacing. The house has 5 bedrooms, 2.5 bathrooms and a swimming pool. The kitchen was replaced 5 years ago and the bathrooms were upgraded about 10 years ago, so the areas which require the most updating are the living areas and the bedrooms.

The property was valued last month at $850,000 in its current state.

I was wondering whether the better choice would be to demolish the house, subdivide the land into 3 separate 10 m wide blocks and sell them as vacant allotments or if it would be a wiser investment to give the house a light fix up to a reasonably presentable level and put it on the market. I am not in a position to build new homes on the land, nor am I in a position to spend a huge amount of money fixing the house up. All I am prepared to do is to remove the wallpaper and give the place a good plaster and paint, replace the carpet and replace the light fittings. I believe this will substantially improve the look of the interior. I will consider furnishing the home with hire furniture once it goes on the market.

A lot to read and to think about, but I am in a tough situation and quite confused as to which road I should head down. Which would be the wiser choice here, and more importantly, what would be a more economic choice that would yield a greater return?

Below is a photo of the exterior of the property.



If you would like any interior photos of the house please let me know and I will be happy to post.

I look forward to your responses

 

[.toe]

Personally to me that house looks too good to make demolishing it the most economical choice, regardless of the interior condition. But you'd need to run all the figures. Start by getting recent sales figures for the land parcel sizes you want to sell.

My question would be could you schmick it up on a budget (you'd be surprised how much you can do with fairly small money). Then can you use any added value to subdivide the back yard, fill in the pool and have plans done to build there? Has that been done in that area? So first question, how much would it be worth with a basic reno, then how little could you do it for?

 

[JD86]

as .toe said, the house looks too good to knock down. subdivide and on sell 3 blocks, but you would have to do research to see if the sale of 3 400sqm blocks equates to more than the value of the house with a bit of renovations

it is a decent size block, you would be surprised how many units you could fit on there, another option is to get a planning permit for units / townhouses, and advertise the house with permits, if numbers add up a developer may be interested in purchasing for more than your $850k. but you would have to run numbers, i do not know the area at all

 

[dl2276]

Hi there,

Welcome to the forum.

Agree that the house doesn't look too bad.

My thought would be whether you want to take the risk of demolishing and be left with 3 lots of land. What if they don't sell ? They won't generate a return whilst vacant (whereas if you had the house at least you could rent it out whilst trying to sell).

I would think better to spend the money otherwise spent demolishing/subdividing on the renovations, especially if the existing house is the sort that appeals to buyers in that area rather than a smaller house on a 400 sqm block.

 

[kathryn d]

Do you own the house free and clear?
Do you need permission from your lender to demolish? (we would in canada)
as they have a stake in this property, which constituters more than just land value.

I also agree, this property looks too good to demolish.
Find another piece of land to build block of flats.
All rentals don't need to be perfect..just habitable.

Fix the roof...you will need to anyways.