Walnut Street Finance Blog

Renovate vs. Rebuild - The 5 Major Differences You Need To Know

Posted by Walnut Street Finance Team on Dec 2, 2019 8:15:00 AM

Renovate or rebuild: This is the ultimate decision when considering a real estate investment. This choice will determine how profitable your investment will be in the long run, so here are 5 major differences you should be aware of before you decide.

Renovate vs. Rebuild

1. Budget

Budget is always important when you’re debating between a renovation and a rebuild. Renovations can be a great way to improve the value of your house on a tight budget. Updating an old bathroom or fixing up your basement can be smaller projects that may not break the bank, but can still increase the value of your home.

Rebuilding, on the other hand, is a major commitment - once you tear your house down, there’s no turning back. Make sure you’ve budgeted carefully to get everything done and allocate additional money for overages. If you’re sure you’ve got enough, that’s great. But remember - if you run out of money during a rebuild, your partially-built house could turn into a massive money pit.

2. Time

The next major difference between a renovation and a rebuild is the amount of time it will take. This is usually dependent on the extent and nature of the changes you’d like to make. For example, if you’re altering the fundamental layout of the house, construction and demolition could be more complex. This could mean a more protracted process with a longer project timeline.

A full teardown, on the other hand, can be done in a matter of days, and new construction can sometimes begin right away. If time is your top concern, being realistic about the scope of work could be the easiest way to make the choice between renovation and rebuild.

3. Consider your goals

Sometimes the answer to renovation versus rebuild can be found by looking at your project’s goals. A total rebuild starts you off with a clean slate - you’re in total control and can be smart about what you are building for long-term value. A new house will also require far less upkeep verses working on a much older house, in the short term, which can add value if you’re interested in an immediate sale.

That said, you can usually get a lot done with smaller renovations. For instance, bringing your house into the 21st century can be as simple as a few smart technology updates. You can even raise the value of the house by renovating just one or two rooms. If your goal is to turn a quick profit, a renovation might be your best choice.

4. Giving your property a facelift

One of the key differences between a renovation and a rebuild is what you’re changing. Renovations are a great way to give an older house a facelift - you can install new fixtures, upgrade appliances, or even get your plumbing up to date. Don’t tear down your house if you’re only interested in appearances.

Rebuilds, on the other hand, should be reserved for projects where simple cosmetic changes aren’t enough. If you’re trying to fix problems with the foundation, or with the fundamental layout of the house, a total rebuild might be the answer.

5. Financing

The final difference between a rebuild and a renovation is financing. Specifically, it’s important to know ahead of time how different types of hard money loans could impact the long-term value of your property. For example, Walnut Street Finance’s construction loans are issued in installments, meaning investors can move through the phases of their project without having to worry about running out of funding.

The bottom line: There are several key differences between a renovation and a rebuild, and the right choice will always depend on your needs and goals as an investor. Whatever you decide, be sure that you pick the financing option that’s right for you.

If you’d like to learn more, check out some of Walnut Street Finance’s free online tools, including our free ebook, Essential Math for the Fix and Flipper.

Essential Math For the Fix and Flipper


This post was originally published March 2018 and has been updated and revamped.





Topics: Real Estate Investing Tips

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