Renovate or rebuild? How to decide

Upgrading your home to meet the needs of your family, or to add value, is a big decision. If you love your area and don’t want to move, it might be time to consider renovating or rebuilding.

We spoke to interiors expert Wendy Moore of The Interiors Edit for her thoughts on the best way to go.

What are your financial objectives?

Before you make any decisions, Wendy recommends thinking about your long-term financial goals.

“Are you looking to generate some profit for the next rung on the real estate ladder, or simply to service your growing family? Knowing this at the outset will inform your decision,” says Wendy.

Consult with your local council about the opportunities and limitations for your block of land. Perhaps knocking down your current home and building a duplex to create extra income is the path for you. Or, if a heritage restriction applies, a sympathetic renovation may be a better option.

Understanding your financial picture, borrowing power and future financial goals will help you set a budget and move into the next phase.

Let’s look at the pros and cons of renovating versus a knockdown and rebuild.

Pros of renovating

• Make incremental changes

• Extend your floor plan

• Renovating adds value

“If your budget is limited, renovating is the optimal choice,” says Wendy. “Invest your money in the areas where you can make the most difference to your lifestyle and stage your projects to suit your available funds.”

If you love to cook, factor a kitchen update into your plans. ”I’d allow $30K to 40K minimum, but you could spend up to $100K for a kitchen with all the bells and whistles,” she adds.

If space is an issue or you’re looking to create indoor-outdoor flow, look into extending your home.

“A living area that flows to the backyard is so sellable down the line. When an extension is done right, every cent you invest will deliver at least the same return and likely more,” says Wendy.

Another way to increase market value is to refresh your façade with updated cladding, improving that all-important street appeal. Before you begin, look at similar homes for sale in your area to make sure you’re not overcapitalising.

Cons of renovating

• Challenges in finding a builder

• Potential for budget blowouts

• Navigating council

Renovating doesn’t come without its challenges. Finding the right builder requires patience and some personal marketing – present yourself as a dream client! On top of that, costs of building materials are rising and unpredictable costs are common.

“Prepare for renovating with a generous contingency fund,” advises Wendy. “Be realistic – it’s a rare project that comes in under budget; and everything from luxurious material selections to unforeseen building issues can affect it.”

Every council in Australia has different requirements that are specific to the area and the approval process is not always straightforward. Do your research and talk to your council before you begin to help minimise delays.

“Not every project requires council approval,” adds Wendy. “But it’s always best to check.”

What does renovating cost?

Unfortunately, there is no straight answer. “I’ve renovated from coast to coast and the costs vary depending on factors like location, size of the renovation and the condition of the existing property,” says Wendy.

Smaller cosmetic renovations taken on room by room or DIY could keep your expenses under $200K, but for an extension, expect to pay upwards of $400K.

Pros of a knockdown rebuild

• You get your dream home

• Cost-effective

• Reduced complexity

“A knockdown rebuild refers to the process of completely demolishing the existing home and building anew,” explains Wendy.

The biggest advantage of taking this path is the opportunity to build a home to your exact specifications. You’ll have a brand-new home in the location you love.

Working with a builder can also greatly reduce complexity for the home owner. Depending on the company and the contract, they may manage the process end-to-end.

Knockdown rebuilds can be very cost-effective, particularly if you choose an off-the-plan design. There will be fewer financial surprises down the line, with the building company wearing the price of rising material costs, for example.

Cons of a knockdown rebuild

• Creates waste

• Decision fatigue

• Cookie-cutter homes

“Knocking down an older home creates a lot of landfill, more so than renovating,” says Wendy. Recycle, reuse or donate as many materials as possible to reduce the carbon footprint of your new build. Visit RecyclingNearYou to find a facility.

Knocking down and rebuilding is a simpler path than renovating, but there are still myriad questions to answer and decisions to make. You will need to confirm every single design choice, from the height of the architraves, the style of the lighting and width of the floorboards to exterior choices like colours, cladding and hardscaping.

An off-the-plan home designed by a knockdown rebuild specialist may also lack individuality. “Spend some extra time in the decorating stage to bring your personal flair to the interior – use art, rugs, paint and bedlinen to create wow moments and add interest,” suggests Wendy.

What does a knockdown rebuild cost?

Again, there is no clear answer to this question, with demolition costs, location and the unique building challenges of your block to consider. Demolition could cost up to $40K and it is realistic to expect to pay $500K to $600K for a new home. [NR3] [SK4] If you’re looking to engage a volume builder for your project, ask for an estimate. The fixed home designs offered by these kinds of builders are likely to cost less than a custom build.

Get started on your renovation or knockdown rebuild journey with the helpful James Hardie Find a Builder tool.

This article is for general informational purposes only. Nothing in this article constitutes financial or investment advice. James Hardie makes no representations whatsoever regarding the third-party services and opinions expressed in this article. You should always seek independent financial advice before making any investment decision.