To Reno or to Demo

Friday 3rd February, 2017

With any old house there is always the age old question of whether to Reno or Demo.  Having recently just demolished an older house, I thought I’d share my thoughts on why we chose to do what we did, but also the situations where a good renovation would also do the trick.

An experienced demolition company will have an old house removed in a couple of weeks for between $16,000 to $25,000 (2017)

Advantages of Renovating

The advantages of renovating an older house is that it can give the building a new lease of life without an expensive price tag of demolishing and rebuilding.  This works well if you’re generally happy with the existing building size and layout and if that suits your lifestyle for the foreseeable time that you would live there.  You could always tack on an extension as well if needed – I’d advise that adding a room or two is fine -but as soon as you start to do anything too significant, the extension costs will quickly outweigh the rebuild cost as it’s harder to work with an existing house than having a clean site.  The disadvantages with renovating is that in the end, you still live in an older home and have the issues that go with that, such as reduced thermal performance, older windows, questionable foundations etc.  Renovating does add a bit of value to a house, but if you’ve got an old house in a valuable area, you’d be under-capitalizing by renovating as opposed to demolishing.

Advantages of Demolition

The advantages with demolishing are that you start with a clean slate and can tailor a house or choose a design that suits the block and your lifestyle well.  Also in the end, you have a brand new house with modern features, layout and thermal performance.  Over the last 50 years, building materials and construction methods have improved substantially, so a new house would typically be more solid for the long term.  The disadvantage with this method is the cost and time-frame.  When buying an older house, you aren’t just purchasing the block of land, so you pay a premium on the land value with the existing house there, then you have to pay for demolition, so you already start off behind.  A new build with all the associated approvals will take longer than a renovation and require you to find a temporary home elsewhere over the build duration.

“The advantages with demolishing are that you start with a clean slate and can tailor a house or choose a design that suits the block and your lifestyle well. “

So aside from the premium you pay on the land purchase with a house, there is almost always going to be asbestos and the cost of demolition can add up.  For a typical smaller weatherboard cottage, the total demolition cost to have a clean site would be around $16,000.  For a larger place with a more complicated site, such as what we just did, the cost can get up to around $25,000.  This price should include everything from approvals, notification, insurance, licences, asbestos removal and disposal, demolition, rubbish removal, tree removal and a site clean-up.  Also note that you need DA approval from council for any significant demolition work that you undertake.

Once finished, the demolition will result in a clear block of land ready to build fresh.
Once finished, the demolition will result in a clear block of land ready to build fresh.

So I’ve recently embarked on my next project and were faced with the decision to Reno or Demo.  The existing house needed a lot of work and being only 2 bedrooms with a strange layout that had been built on over the years, it wasn’t really suitable for our lifestyle into the future.  The way the house was built and positioned on the block made it difficult to do an extension and the quality of finish and thermal performance we wanted would have resulted in a renovation costing more than a new build.  The other significant factor was the land value, where by renovation, we would have been significantly under-capitalizing on the block.  i.e. if the existing house was worth $300,000 and we spent $100,000 renovating, it would result in an end value of $350,000 because the house wouldn’t be suitable for the location.  But if we spent $700,000 on a demolition and new build, the finished value would be $1,000,000 because the value of the block with a new suitable house lifts the house value by capitalizing correctly.  We can then leverage against that additional $300,000 in value for future projects if need be.

After extensive quoting, we chose to use a company called World Wide Demolitions based in Oak Flats.  They came in with a good price and though their reputation had been talked down by competitors, I thought, “well how wrong can a demolition go”, provided they have all the appropriate licence and insurances.  Having supervised their work, I can tell you I’ve only got good things to say about them and have had great feedback from neighbors with regard to the quality of work and in particular the care taken with the asbestos removal.  The entire demolition was completed in about 15 days with no problems, or any hassles on site.  I can’t speak from experience about other demolition companies, but would be happy to recommend these guys.

Written by Michael Whitehouse (Facebook, Twitter, Linkedin)
Edited by Vivian Pham (Linkedin, Twitter)

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