Thinking of doing a knock down rebuild but not sure about its feasibility. Is this the way to work it out?
Purchase price $150K, 1997
Market Value now, $400K, 2012 – Gain of $250KAssuming Knock Down Rebuild (KDR) costs $350K
Cost Base after KDR, $500K
Market Value after KDR – $650K…. Very Unfeasible – Gain of $150K
Market Value after KDR – $750K…. Unfeasible – Gain of $250K
Market Value after KDR – $850K…. Feasible – Gain of $350K
Market Value after KDR – $950K…. Very Feasible – Gain of $450KTherefore, I should only do the KDR i my mrket research can assure a future market value greater than $850K
Paul
pbakker wrote:Thinking of doing a knock down rebuild but not sure about its feasibility. Is this the way to work it out?Purchase price $150K, 1997
Market Value now, $400K, 2012 – Gain of $250KAssuming Knock Down Rebuild (KDR) costs $350K
Cost Base after KDR, $500K
Market Value after KDR – $650K…. Very Unfeasible – Gain of $150K
Market Value after KDR – $750K…. Unfeasible – Gain of $250K
Market Value after KDR – $850K…. Feasible – Gain of $350K
Market Value after KDR – $950K…. Very Feasible – Gain of $450KTherefore, I should only do the KDR i my mrket research can assure a future market value greater than $850K
Paul
Hi Paul,
Try sitting down with 2 real estate agents and ask them to provide you with a pessimistic value after the construction (show them the plans of the proposed building) and see what value they provide you. The other benefit of talking to a real estate agent is that they will advise you what works well in the area (e.g. ensuite, high ceilings, number of bedrooms, etc). Also have you considered say the rent you will be paying whilst the dwelling is being constructed?
Shahin Afarin – Property Finance Consultant
http://elitepropertyfinance.wordpress.com/TheFinanceShop | Elite Property Finance
http://www.elitepropertyfinance.com
Email Me | Phone MeResidential and Commercial Brokerage
Perhaps you should consider building two buildings, rather than one. If the land will accommodate this it will almost certainly be more profitable. It may also be less risky as you will be hitting a lower price point.
Unfortunately it is a sloping block with part bushland and won’t fit more that one house. But this is what makes the site unique… bush at the back and city/ocean views at the front.
Sounds like a great spot.
To be honest, you should definitely check every option before conducting a KNB. You never know if it would be a huge financial mistake on your part.
You must be logged in to reply to this topic. If you don't have an account, you can register here.
