What is a Knock Down Rebuild Development Project (And the Five Benefits of This Type of Development)

Take advantage of prime locations as a developer. Rebuilding from scratch can be an excellent option.

The idea of a knock down rebuild can be applied when finding development sites to build townhouses on to sell or rent.

While it doesn’t pop up in conversation too often, doing so sometimes makes sense from a financial and architectural standpoint.

Knock down rebuilds are projects that do exactly what they say – for a property developer it means knocking down walls and rebuilding a property to either sell, rent, or turn it into a modern ideal property for the existing owners…

Granted, it’s a rather lengthy development process. And like any other, it requires doing a development feasibility study to figure out if it’s the right move. This is due to a knock down rebuild having four main phases: home design, site assessment, demolition, and construction of the new home, townhouse, or apartment. 

As with any other development project, you need a design and a thorough analysis of the land and area surrounding it. You also have to obtain permits, including asset protection and demolition permits. It can also involve a wide range of landscaping modification based on your design.

But, even though it’s hard work and can take longer, it also offers many more benefits in some selling or renting strategies for developers. 

The Benefits

Building on Prime Locations

As a developer, you’ll want access to prime building locations that excite buyers to get the most out of your investment. 

It’s because one of the first things homeowners look for is the location. After all, people want to live in specific areas.

But there’s a problem.

In Australia, it’s a fact that we have a shortage of land around the metropolitan areas. There’s not enough land to buy and develop homes from the ground up. At least not on prime real estate and without spending a fortune on the land.

That’s where knock down rebuilds come in for property developers.

By tearing down old homes and developing new ones from scratch, you can add even more value to a prime location. 

Modern buildings always sell better. If you already found an excellent site to work on but it has an old building on it, why not add value to the site with a modern townhouse or a few apartments?

It’s Often More Cost-Effective Than Renovating to Sell or Rent

Property prices are on an ascending path. And it’s becoming more expensive to find the perfect site or great development opportunities. Hence, knocking down an old house in an ideal suburb and building dream properties is lucrative for developers. 

It’s another reason why knock down rebuilds can be more cost-effective.

If you think about it, even the demolition costs should be cost-effective. They’re often cheaper than some of the reparations you might have to do in an old home to make it appealing for buyers or tenants.

There are also plenty of projects that wouldn’t even require you to buy the land, build a new home, and then search for buyers. 

You can add a lot of value to a prime location by developing a modern home, townhouse, or apartment unit for its current owners. That has a lot of money in it for you because you wouldn’t have to invest as much in the project.

Knock down rebuilds can be cheaper, but there’s no guarantee that it’s the case every time for developers. That’s why you must always perform your development feasibility study.

You Can Add Value to a Prime Location

New and well-designed homes in great locations can have amazing value. And opting for a knock down rebuild isn’t always a matter of investing in comfort. 

You could also look at it as investing in a property that will be worth more when you’re ready to sell. 

Since market prices are going up, a modern home on a great lot of land can be even more profitable. This is something to consider as a real estate developer. 

As a property developer, buying older houses in great locations could bring in some profit for you. Instead of working with an empty plot, you could divert your attention to a knock down rebuild opportunity. 

Just keep in mind that it might not net you the same profit as working on an empty lot because of all the costs to consider. 

However, empty land is already scarce in prime Australian real estate zones.

That’s why if you want to commit to developing property in great areas, a knock down rebuild could be your only avenue into prime real estate locations.

There’s Less Guesswork Involved

Homes degrade over time. That’s why living in a pre-owned building can lead to certain surprises once renovations start. 

It’s not uncommon to discover faulty wiring, shaky foundations, even an asbestos problem. Developers often run into these issues in the midst of renovation projects. But it’s never a good thing because it can increase the cost of the project and the completion timeframe.

A benefit of a knock down rebuild is that it eliminates most of the guesswork.

You can tear down the whole structure and work off a blank canvas. Doing so makes it somewhat easier to manage costs and avoid surprises so you can stick to your schedule.

Sure, it’s still possible to run into unexpected challenges. While the home is no longer a problem once you knock it down, the land could still hide some issues. 

It may also be easier to get a good deal, or shake on it faster in a knock down rebuild project. 

Why?

Homeowners know that developers can get better profits by building multiple units on the land. So, sellers may be inclined to sell directly to developers who may offer a higher price for their property given the potential returns, instead of working with real estate agents.

You Can Go Greener With a Knock Down Rebuild

Modifying a home into a more eco-friendly and green homestead isn’t always easy. The design, infrastructure, wiring, plumbing, and everything else can affect development feasibility. 

It can be too expensive to go green after a traditional renovation. Some projects may also require structural changes, which never come cheap.

Choosing a knock down rebuild eliminates all of those problems. 

You can design and build a home around green technology. And you can also modify the landscape so that it accommodates your new vision for the home.

But why should you consider this? 

Eco-friendly homes are in high demand. People want greener and they’re willing to pay, which makes it easier for you to sell this type of property, especially in prime locations.

An Option Worth Considering

No one says that a knock down rebuild is your only shot at a prime lot. However, it’s one of the easiest ways for developers to secure great locations. You may invest more initially because the plot isn’t empty. That said, your returns could be nothing short of impressive.

You can build modern apartments and townhouses instead of working with a single property. Not to mention you can even make deals directly with sellers. Perhaps it’s also your shot at going green and offering something that gets buyers even more excited. 

There are tons of benefits in these projects for developers who act quickly.

Are you wondering how a knock down rebuild could benefit you or if it’s recommended in your area? 

Book a demo of our Archistar platform. Take advantage of our site finding features and find the perfect place to knock down an old house for your apartments or townhouses. We also offer comprehensive feasibility reports to identify the profitability of your preferred development sites. In addition, our generative design tool provides dozens of apartment or townhouse design options to choose from.