House Removal and Investing

 

The financial benefits to investors buying houses for removal can be significant and investors could benefit in a number of different ways. For example an investor who deals in redevelopment could sell an existing house they no longer need and save the costs of demolition (which can be between $10000 and $20000) plus they might also receive money for the sale of the house as well. Another investor might have a property with an existing house on it that is not ideal for return on investment and by removing the existing one and replacing it with another more suitable house could improve the value of the property potentially increasing capital gain and rental income.

Many investors over the years, particularly in Brisbane, have bought and redeveloped what are referred to as splitter blocks where a house straddles two subdivided lots on a potential development site. The idea is that you either sell the house for removal and put two smaller houses on the two sites or you move the existing house over onto one site and move another house onto the adjacent one.

An investor wishing to obtain a return on investment from a vacant block of land has a choice. Build new or install a used home. When comparing the cost of building a new home to the cost of installing a used Removal Home, the savings can be considerable. Because a removal home is derived mostly of used materials, and used materials sell for significantly less than new (rule of thumb about two thirds of new cost) then it follows that removal home buyers will usually be prepared to pay about two thirds the cost of a similar house built from scratch. Although the removal home buyer has paid only two thirds of the cost of a new replacement, does not mean that his property is now worth any less than a similar property next door with a similar house on it, albeit new. The investor using the used removal home pockets the profit from the project rather than the builder who was employed by the investor next door. Its either that or the investor building a new home is paying a premium for a new house which he is unlikely to ever recover.

It’s true that the investor who used the removal home may have had to project manage the installment and perhaps renovation of the house, but the investor next door had no choice but to employ a builder to build the new house, unless he was a builder himself.

Companies who find houses for investors/buyers and assist them with the removal and installation process provide valuable resources, help and advise to would be investors. Most have a good range of houses available that have been pre priced and pre assessed for removal viability removing uncertainty and saving valuable time in researching suitable houses. They have the contractors available for relocation of the house and installation of the new foundations or stumps required. They usually have access to specialised approval consultants who are helpful in navigating the often complicated council approvals process required at each end of the house relocation project. Others have house storage facilities that are sometimes needed to bridge time periods between approvals.

In any event it pays to have the right advise and be pointed in the right direction by someone in the know, particularly in something as specialised as house removal. Always choose a house removal company that is properly licensed to deal in removal homes. The minimum requirement these days (in Queensland at least) is a company with a builders license, or a builders license restricted to house removal. Operators should be adequately insured for public liability, have transit insurance and contractors all risk insurance. Reputation and length of service in the industry are important too.

Insurance can be difficult to obtain privately for house relocation projects, so it’s important to use companies and contractors who have the necessary types of insurance already arranged. It’s rare for consumers to be charged extra for insurance taken out by operators as its usually included in the overall cost.

The cost of a house removal project can vary considerably between jobs. Factors including the size and condition of the house, how many sections it needs to be transported in, which particular local councils are involved, the materials the house is made from, along with many others factors affect the overall cost and ultimately the viability of a house relocation project. Most houses are priced by removal home companies to include the house as it is, relocation within a specified distance and installation onto foundations to a basic standard and based on delivery to a standard building site with reasonable access. Most houses priced to include these factors cost between $500 and $800 per square meter of floor area. Costs in addition to that will include things like council approval (which could cost several thousand dollars), renovations if required (which can vary), re-connections to services such as water, gas, electricity and phones; and site works. The average house sale would be somewhere in the vicinity of $70,000 delivered and re-stumped within 100klms for a house of about 100 square meters in size.

Posted in house removal investing real estate development.

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