KDR Journey – Dream or Nightmare?

Three years ago we had explored the option of knocking down our existing home and rebuilding. Sadly, 2017 wasn’t quite the right time for us financially and we would have struggled to find a bank that would finance what we wanted to do. What we did instead is self-financed a home renovation out of our savings and rented the property out while we searched for our forever home. In 2021 this is clearly not working out for us and our growing frustration with the overvalued houses in the market has forced us to explore the knock down rebuild option once again.

The KDR process is quite complex just to add to the drama of building a house in general. Right now we are in the process of sifting through a handful of designs and builders trying to come up with the ONE that we can go to our mortgage broker with and then eventually pay the tender fee to get the ball even started. The builders that we are considering are Kurmond Homes, Wisdom Homes, All Castle Homes, Masterton and McDonald Jones. Based on the designs that we have looked at, they are priced similarly however we haven’t drilled down and compare standard inclusions versus upgrades which I think is an important step. I’m afraid we are going to be dictated by what the lender is going to value the house on completion which is always lower that you would like to think.

So why are we considering this option again? Well to be honest, a comparable house in Kellyville is fetching around $1.5-1.6M and at the moment there are very little pool of houses to choose from that are for sale. Let’s list our pros and cons shall we:

  • No stamp duty (equates to $68,000 on a $1.5m property)
  • Brand new house
  • Custom designed house with your choice of inclusions and colour palette.
  • We get to keep our pool (Saving at around $60k)
  • Live closer to grandparents and work

So what are the negatives then:

  • Hidden site costs (this one scares me as we don’t quite know the history of the land that the house currently sits on.
  • Complexity of the construction loan finance.
  • Takes longer (due to council approvals and regulations)
  • Upgrades costs a lot

A real estate agent knocked on our door this afternoon asking a few questions, I guess fishing for some information regarding how he can sell me house or sell our house for me. In the end I let him make his pitch, he told me about the houses that he’s sold recently that has fetch far more than the vendor had anticipated…blah blah blah. I then countered with, that’s great! The thing is if you sell my house for more than what I had anticipated, it is very likely that the next house I’m going to buy will also be more than what I’m willing to pay for. You can’t have it one way and not the other. Most of the time, the seller will become the buyer. If this is the route we took, we would end up worse off by at least a couple of hundred thousand dollars and still not end up with the perfect forever home that we have dreamt about.

So there we have it our first steps again dipping our toes into the knock down rebuild adventure. I will try and keep this series of blog posts updated and hopefully the end result will be a post about how we’re going to get handed the keys by the builder and how smooth everything went. I wish.

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