If you own a house that “needs a little love” (as you often see in real estate listings), you might be wondering whether to spruce up the existing house or to tear it down and start over. This is a big decision that requires careful consideration. To make the right choice for your budget and needs, start with a few questions, then take a hard look at what you hope to achieve, your existing house’s condition, and local laws that may affect the project.
Wondering whether you should remodel vs. rebuild your existing home? Home improvements and property upgrades represent significant expenses for most homeowners—and you want to get the best return on your investment.
That means you need to understand the significant differences between a remodel vs. a rebuild in time, budgets, permits, and contractor needs. Without proper planning, budgeting, and long-term investment consideration, you could wind up “over-building” your property, losing out on money in the long run.
Here’s everything you need to know when faced with a remodel vs. rebuild decision—and how to make the most of your home improvement budget.
How Long Will You Stay in Your Home?
If you plan to be in the house for the long-term and then sell it, it is usually wiser to tear down and rebuild, at least from a purely financial perspective.
Physical elements of a home are on a timer. The minute the hammer strikes your house for the last time, that timer starts ticking. Exterior paint might last up to seven years, but more like five years in inclement climates. Dishwashers last less than a decade, central air conditioners last about 10 to 15 years, and three-tab composite shingles are suitable for almost 20 years.
On top of that, while some elements’ lifespans are staggered, many others expire at roughly the same time. In terms of cost, replacing a dishwasher is nobody’s idea of fun, but imagine having to do that in the same calendar year that you replaced your roof, gutters, and central air conditioner.
By rebuilding, you reset the clock in terms of the house’s physical nature: everything from the appliances to the house’s envelope (e.g., roofing, siding, etc.). When it comes time to sell 15 years later, you’re selling a 15-year-old house instead of one that is 40 years old. As a bonus, you had the pleasure of living in a new house during those 15 years. Buyers are intimately attuned to the age of homes—if they aren’t, their real estate agent and house inspector will make them well aware of this fact. MJS Construction Group has the best range of home builders Melbourne services to help you create your dream house.
How Much Do You Want to Spend?
If you’re tight on money, remodelling is always the way to go. The issue is scale—your ability to scale your spending up or down (or freeze it) according to your needs and resources. For example, you can start by remodelling a bathroom then move onto other rooms as your budget and time allow.
Alternatively, the teardown and rebuild option is all-or-nothing. After your first big purchase—the demolition—you’re left with a vacant lot, committing you to build the new home. Unless you want to be the owner of a vacant lot, you must keep moving forward. The worst thing is to have a partially complete house because structures left exposed to the elements age quickly.
Remodelling Vs Building New: What Do You Want Most?
When deciding on building new or remodelling, you first need to know what’s most important to you and what type of home you want. Ask yourself what you dislike about your existing home and why you’re considering a change.
A family that’s growing and a family where the kids have left the nest for goodwill likely need two very different homes. It may be more important to add new bedrooms or turn small, unused rooms into a larger space for entertaining. Sometimes people want to achieve a specific goal, like having room for a hot tub or adding large bay windows to take advantage of a great view.
Knowing what you want can give you an excellent point to determine what you might need, such as entirely new construction, and it can help you prioritize your timeframe, budget and more.
Remodelling a House Vs Building New: Interest Rates and Equity
The starry-eyed among us often focus on the fantastic new possibilities that a new or remodelled home could provide. We imagine parties in the expanded dining room or plan what colour to paint the new nursery. The ethereal details help us frame our desires, but there’s also a strong need for firm financial footing in the real world.
Many mortgages include clauses that address whether or not you can tear down your home, freeing up land for a rebuild. Sometimes stipulations are placed on how soon the rebuilding process must begin. Sometimes lenders ask to be included in the planning process. And sometimes, your mortgage may forbid demolishing your home. Finding the right Melbourne home builders is an important decision. Check out our range of the best home design constructions at MJS Construction Group.
The main reason behind this is that you’re destroying the security the bank or lender has for your loan. Demolishing your home can also negatively affect your equity in a significant way. You can quickly dip into negative equity, which may prevent you from using a home equity loan product. When your home is demolished, and a new one is built in its place, you’re responsible for the cost of construction, and you must eat some of the lost value when you lose equity in the building that is gone.
To address this, you may need a new mortgage or a credit line that operates along the same lines of a mortgage. You’ll need some collateral, which is typically the new or renovated home, and often you’ll need to bring some of your cash to the table.
Take your time with these financial decisions and look at your options available, including FHA and traditional loans with 15-year, 30-year, fixed and variable rates. To start the new home process, you should obtain a prequalification or preapproval from your chosen lender for a mortgage.
When considering these financial products, you should shop around to find the best interest rates, repayment terms and fee schedules. Some lenders may offer you advantages such as no origination fees or early repayment penalties, which can make a big difference in the amount you’ll pay throughout the life of the loan.
Choose Between Better or Cheaper
If you want better, tear down and rebuild. If you want a cheaper, remodel. Even a wide-ranging whole-house remodel will still be more affordable than tearing down and building anew.
According to Roger Greenwald, RA, AIA, “the cost of tearing down and rebuilding will be about 20 per cent higher than engaging in an extensive whole-house remodel. But the architectural benefits of tearing down and working with a clean slate can be huge: Better fundamental architectural design, all new systems, clean circulation, high-quality windows, new and efficient heating and cooling systems, tall ceilings, and space designed for your unique living patterns placed where you need it.”
Determine the True Condition of the House
While all houses can be remodelled, not all homes should be. Industry professionals generally agree that the following conditions merit a teardown/rebuild, or at least swing the argument further in that direction:
- Desired improvements cannot be contained within the existing house footprint. Thus, you want an addition. The need for additional space is certainly not the only reason for building anew; additions get made all the time. The issue is that it happens in conjunction with extensive, expensive remodels of the existing house—a double draw on your funding.
- The foundation is wrong and requires a lot of work before the house can be remodelled.
- Are ceilings too low for your liking? It’s no simple matter to raise a ceiling—unless there is plenty of space up there. The floor above must be removed and then rebuilt.
Be Aware of Zoning Restrictions
Zoning laws govern the type, size, and location of buildings on any property. In urban and many suburban areas, home rebuilds are often restricted to the original house’s footprint. In other words, you can’t tear down a small house and put up a mansion. Zoning laws also may restrict the height of a new home so that you may be limited to not only the old footprint but also to a one- or two-story structure. Additionally, laws may not allow rental properties in many zones. If you’d like to build an addition or carriage house to use for renters, this may not be permitted.
Remodel Vs New Construction: What’s Your Time Frame?
Homeowners deciding on remodel vs new construction should determine how long they can afford to be away from their home while the process happens. Remodelling and building both require time and disruption of your everyday life. Let’s examine possible timeframes for remodels and new construction:
Depending on your situation, you might be able to use much of your home during the remodelling process. If you plan appropriately, you can limit the remodel to a few rooms and perform tasks in a particular order. Remodelling can take one week to nearly 10 weeks based on the project. The most extended projects tend to be significant room changes, such as converting a bedroom to an attic. Thankfully, considerable room changes tend to create minimal disruption.
A bathroom renovation or refinishing hardwood floors are typically the most disruptive, but they take about two weeks. During this remodel, you have to avoid large areas of your home. You’ll experience interruptions like shutting off the water, and you’ll need to be entirely out of the house while fumes from some floor finishing solutions dissipate.
It’s typically easy to manage to live in your home during an exterior remodel. You probably won’t need to move out for siding and roof replacements, and the biggest distraction is noise. The remodel will likely occur during regular work hours.
The unfortunate side of things is that your home may require multiple projects to complete an entire remodel, and many of these cannot happen at the same time. Sometimes long strings of renovations and remodels take more time than a new home construction would.
Building a new home usually takes longer, and you’ll have to find another place to stay while the construction happens. A completely new home takes about six months from demolition to the finishing touches. There are options you can choose to save time if you choose a modular build, but going the other direction with a completely custom-designed and custom-built home can significantly extend the timeframe.
With our long history of new home construction, we’ve identified a few key factors that impact the length of time it will take to complete your new home:
- The size of the home you want
- What type of home you want, including overall design and floors
- Custom design options and overall complexity
- Design changes — most people want to maximize good views and sunlight
- Builders you choose and their team of subcontractors
- Your city and county building and licensing departments
- The weather throughout your project
- Unexpected weather events, which can delay construction or make building materials in your area scarce
There are many working pieces for any new home construction, and they’re significantly more involved than most home remodels. That means if time is short, a remodel will win out in consideration of: should I remodel my house or buy a new one?
Renovation versus New Construction: Which is Greener and Better for the Environment?
With all of the advanced green building systems, the process of new construction is often faster than renovating an existing structure. But when you factor in having an existing building and infrastructure, which has the most significant impact environmentally?
While the ease of new construction might be preferred, the more significant potential for reducing your carbon impact during a renovation than a new structure is very apparent over a 75-year life span of a home or building. The National Trust for Historic Preservation recently stated that the greenest building might be the one you already own.
A new building that is 30% more energy efficient than the average building could take 10 to 80 years to overcome the negative carbon impact of new construction versus renovation. There is an immense amount of energy and CO2 locked into existing buildings from the foundation, materials, power to make new materials, transport materials, etc. that provides savings in carbon dioxide compared to the demolition (energy to destruct and haul away) of an existing structure and the creation of a brand new building. At MJS Construction Group, we have the best home builders selection to make your house a dream come true.
CO2 emissions from homes or buildings include two distinct sources; “embodied” CO2 given off during the building process and the manufacture of the materials during the construction of the house, and “operational” CO2 given off from the energy use of living in the building. Renovating an existing building saves substantial CO2 emissions. Still, over a life span of 50 to 75 years, there will be a crossover to where the 30% more efficient new building would save more CO2 emissions through energy savings. But the question is – are short term CO2 emissions more important than long term, more significant savings, assuming everything else stays the same?
Remodelling and building are both viable options. Consult with a professional Realtor before making your final decision.
Determining if it is cheaper to remodel or build new may come down to how long you want to live in your home after the project is completed.
Remodels often provide the biggest short-term gain because they make improvements usually against existing equity, focusing on immediate returns. New construction can be more challenging to finance, and you have a more significant expense to pay off, so an increase in your home’s worth takes longer to become advantageous.
In the simplest of terms, remodels are often the better choice for homeowners who will not stay in the home for more than seven years but who want to enjoy the time they have left in the house. Since gains are most significant in the short term, remodelling often gives you the biggest bang for your buck if you’re selling soon.
When you want to build something new, which is not cheaper than your remodel option, you’ll see a better lifetime value if you’re not planning to move. You get more enjoyment from what you pay for and don’t have to focus on immediately recouping your money and equity. Most people save money with the cost of a single construction event instead of paying for multiple individual remodelling projects over a more extended period.
A new home will often have a higher value. If your area’s housing market takes off, you can capitalize and likely make a good profit. When selling, you can also look at adjustable-rate mortgage refinancing that will give you a bigger bang, essentially by reducing your mortgage payments while your home is on the market.