My Fiance and I are both public servants in the ACT on a combined income of around 110k gross. We have just purchased a brand new townhouse for $390k with a mortgage of $270K in the ACT.
We also have my original first home in Ipswich QLD as an investment property. We owe 100k on this house and it is worth somewhere around $230-250K but it is hard to say right now as the Ipswich market is moving so fast…. again. The house is war era (1914-1945) and I beleive it was buit around 1930. It will need some fairly major renovation in the near future.
My question is, do I renovate the Ipswich house or remove the house and sub-divide the block?
Renovation first. The house will need in the next three to five years – restumping (10k approx), new roof (10k approx), Exterior paint job and bathroom renovation (10k approx). The bathroom renovation being necessary as a window in the shower recess is rotting away. That is all that is necessary to keep the house standing but to get the house up to a 'good' standard I would add a kitchen reno (10K) and a rear deck (15k). That is an investment of approx 55k after which we will have a property which will last a lot longer and is valued somewhere around 300K at todays prices. Assuming we borrow all of the money for the work our mortgage on the propert would be 155K.
Or, have the house carted away on the back of a truck (I might even be able to make 5 or 10K for that but I am not counting on it) and build two brand new places on a subdivided lot. Council approval is not guaranteed but the house is not herritage listed and is not in a herritage zone. I would like to build 2 lowset Queenslander style properties for the prime reason that they would not require laying a slab on the highly reactive and unstable soil but charater look housing might also go someway to appeasing the council.
I have no idea about building costs but assuming I could build two good quality three bedroom homes for $150k each then I have two brand new properties and a mortgage of $400k. Sell one, or sell it off the plan, and I have a brand new 3 bedroom home (as oposed to a 70 year old one) and the same mortgage as before of around 100K, now it is just on half the block size.
That is a LOT of assuming I know. building costs, sale price of the finished home etc, but how do I take some of the guesswork out of the equation and come to a decision?
Option 3, sell the home take the money and run, is not one I am considering unless you guys can pursuade me! I strongly believe that the lower end of Ipswich housing still has a long way to go in the next three to five years as the transport corridor to the area is finally upgraded.
Thanks for listening. Happy to hear any ideas of what to do with my house!
Simple.
depending on land size and dimensions, my opinion says to demo house, build (and subdivide).
I often do it and (without knowing the area) I'm pretty confident you'll make more profit in the long run using this method. You wont get much (if any) money for the removal of an old house (unless there is specific or rare fixtures/fittings). Keep in mind that demos can cost (in Vic anyway) anywhere between $8-12k (depending on degree of difficulty and size. But I would think that the assumption of $150k per house may be under stating the planning/design/build costs for a decent size houses or units. Hope this helps a little.
Cheers
HutchThanks Hutch.
The block is 809sqm.
Any other opinions welcome!
I think perhaps look at what your goals are here…is it for future CG, is it for cash in the short future….I would say even the land alone could be worth in the 200s for each subdivided block in Ipswich…so my question to you is, what is the purpose here???
Hi Andy
Thanks for your comments.
The purpose is certainly not for short term gain. The goal is to hang on to at least some of the land and come out of the deal with a brand new property instead of a 70 year old one, owing about the same as before.
OR, owe more money but keep all the land and redo the 70 year old house to keep it going for a while longer.
As far as I can tell it a lot depends on the cost of building…. something I know nothing about
OK, if its long term, and because its Ipswich, I would say make it "rentable" so that it brings in at least a decent income and wait…this is relatively cheap for you to do, will be easy to hold and easy to do…building has its advantages, but also a lot of disadvantages. If I was in your shoes, I would think about maximising cf, therefore easier to hold, and use the extra income to purchase another, maybe even in Ipswich…. A tough one Daniel Son….
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