A vacant-house decision is larger than a construction quote
An inherited or long-empty home can create a deceptively simple question: demolish it or repair it. A demolition quote, however, does not show later land tax, grounds care, safety work, insurance, finance, or sale costs. A renovation quote does not show vacancy, collection loss, owner-paid repairs, brokerage, the tenant-deposit refund, or the cost of selling at the end of the study period.
Selling now avoids a capital project but may lock in a discount for the existing condition. These paths place cash at different dates, so their undiscounted totals are not directly comparable.
This calculator puts the three paths on one year-zero present-value basis. It compares a sale as-is now, demolition followed by land holding and sale, and renovation followed by rent and sale. It uses only the figures you enter; it does not supply a Korean market rate, predict appreciation, diagnose the building, calculate tax, or approve public support.
The highest result is labelled the highest NPV under your inputs. It is not a command to proceed. The evidence checklist, warning list, annual cash flows, break-even rent, break-even vacancy, and sensitivity grid are equally important outputs.
Use the first run to discover missing evidence. Replace assumptions with a site review, like-for-like written quotes, a local support decision, supported rent and sale comparables, and case-specific tax advice before making an irreversible decision.
The three strategies on one timeline
Timing and scope of the three vacant-house strategies| Strategy | Year zero | During holding period | At horizon |
|---|
| Sell as-is now | Sale proceeds less transaction costs | No later cash flow in this baseline | Ends at year 0 |
| Demolish, hold land and sell | Demolition plus ancillary cost less confirmed support | Annual land tax, care, safety, insurance, and finance | Land sale proceeds less sale costs |
| Renovate, rent and sell | Net works cost and tenant-deposit receipt | Vacancy-adjusted rent less annual owner cost | Home sale less costs and deposit refund |
The current MVP deliberately uses an immediate as-is sale as the baseline. It does not model holding the unrepaired building for several years. That choice follows the roadmap decision of comparing a current sale with two active projects. If an as-is sale would itself take months, include the expected interim costs in the as-is sale-cost input or prepare a separate scenario outside this tool.
The demolition and renovation paths share one study period from 1 through 30 years. Annual cash flows are simplified as year-end amounts. Construction delay, relocation, bridging interest, and lost rent during works belong in renovation ancillary and downtime cost.
Build an evidence pack before entering numbers
A neat spreadsheet does not improve weak source data. Gather documents that describe one property, one scope, and one decision date. Keep screenshots and verbal estimates separate from signed or written evidence, and record whether each quote includes tax and ancillary work.
- A recent registry and building record, site photographs, ownership shares, access constraints, utility status, and known safety notices
- A scoped demolition quote covering removal, sorting, haulage, disposal, protection, professional services, and known asbestos work
- A trade-by-trade renovation quote covering structure, roof, waterproofing, electrical work, plumbing, heating, ventilation, insulation, finishes, design, supervision, and contingency
- Written local-authority confirmation of any support, including eligibility, delivery method, land-use condition, approved amount, and payment timing
- Separate evidence for the current as-is value, cleared-land horizon value, renovated-home horizon value, achievable rent, and vacancy
- Case-specific estimates for brokerage, registration, clearance, tax, finance, insurance, repairs, and tenant-deposit safeguards
Step-by-step calculator workflow
- Set one study period and discount rate
Five years is an input aid, not a regulatory or investment standard. Match the period to the family decision, financing horizon, expected project completion, and realistic sale date. Use a discount rate that is consistent with nominal cash flows; do not combine inflated future amounts with an unrelated real discount rate.
- Enter the as-is sale baseline
Use supported expected proceeds rather than one optimistic asking price. Deduct brokerage, clearing, registration, and tax reviewed for the actual owner. The calculator does not infer capital-gains or other tax because acquisition basis, inheritance, home count, holding period, and transaction structure can materially change the result.
- Normalize the demolition scope
Enter a total written quote or first use the adjacent building demolition cost calculator. Put survey, design, supervision, asbestos, safety, permits or reports, utility disconnection, building-record closure, finance, and other excluded items in ancillary cost. Do not assume a low structural-demolition line includes waste or statutory work.
- Add the land holding and exit assumptions
A cleared plot can still require tax, mowing, fencing, drainage, insurance, safety work, neighbour protection, and interest. Enter a supported horizon land value and sale cost independently from the current house price. The tool does not forecast land appreciation.
- Enter renovation, rental, and exit cash flows
Keep the works quote and ancillary or downtime allowance visible. Enter the tenant deposit separately because it is a refundable liability, not income. Monthly rent is the amount before vacancy; the calculator applies vacancy and collection loss, annual rent growth, and annual owner operating cost.
- Apply support only after confirmation
A typed support amount is ignored until its confirmation box is checked. Even then, applied support is capped at the relevant initial cost, preventing a negative project cost. Do not combine direct municipal demolition with a second cash grant unless the competent authority confirms both without duplication.
- Review the evidence warnings and sensitivity grid
Clear the quote, rent, sale, and procedure checks only when the underlying evidence exists. Then test whether renovation still leads when its cost is 110% of the base and vacancy rises by 10 percentage points. A small lead that disappears in this cell is a request for better evidence, not a robust advantage.
Present-value model and formulas
Common discounting rule
A cash flow at the end of year t has present value `cash flow / (1 + d)^t`, where d is the annual discount rate. Year zero is not discounted. Each strategy NPV is the sum of its year-zero through horizon present values. Positive values are inflows and negative values are outflows.
The model follows the common-period and consistent-assumption principle in NIST Handbook 135e2025. That handbook supplies a life-cycle-cost method, not Korean legal, market, or investment advice.
Confirmed support rule
Initial cost equals the main quote plus ancillary cost. Applied support equals zero when confirmation is unchecked. When checked, it equals the smaller of the entered confirmed amount and initial cost. Net initial cost equals initial cost less applied support.
This rule is intentionally conservative because Korean vacant-house programmes can depend on location, budget, selection, documents, public-use conditions, and direct municipal delivery rather than a universal cash payment.
Demolition path
Year-zero cash flow is the negative net demolition initial cost. Each later year includes negative annual land holding cost. The horizon year also adds land sale proceeds and subtracts land sale costs and tax that the user has independently confirmed.
The model does not value development rights, zoning change, subdivision potential, future construction, or an option to rebuild. If those are material, this result is only the cleared-land portion of a larger feasibility study.
Renovation and rental path
Year-zero cash flow equals negative net renovation cost plus the tenant deposit. Annual gross rent equals monthly rent times 12, times one minus vacancy, times the rent-growth factor for that year. Annual owner operating cost is then deducted.
At the horizon, renovated-home sale proceeds are added, sale costs are deducted, and the tenant deposit is refunded. Deposit receipt and refund both appear because the deposit is financing with a repayment obligation rather than rental income.
How to read break-even rent and vacancy
The comparison target is the higher NPV of selling as-is and demolishing. The break-even monthly rent holds renovation cost, support, deposit, owner cost, rent growth, vacancy, and horizon sale assumptions constant, then solves for the monthly rent that makes renovation NPV equal to that target.
If renovation fixed cash flows already exceed the target before rent, the displayed break-even rent is KRW 0. If vacancy is 100%, rental cash-flow capacity is zero and the rent threshold is unavailable.
Break-even vacancy holds the entered monthly rent constant and solves for vacancy that makes renovation equal to the target. A result below 0% means even full occupancy cannot close the gap. A result above 100% means fixed renovation cash flows exceed the target even without rent. If monthly rent is zero, the vacancy threshold is unavailable.
Compare a calculated threshold with conservative local evidence. A break-even rent above plausible market rent, or a vacancy tolerance far below observed turnover, is a warning that the renovation path depends on an aggressive assumption.
Synthetic five-year example
The Load synthetic example button supplies a transparent test case, not a Korean price benchmark. It uses a five-year period and 4% discount rate. The as-is path assumes KRW 80,000,000 proceeds and KRW 2,000,000 sale costs. The demolition path assumes KRW 18,000,000 initial cost, KRW 5,000,000 confirmed support, KRW 1,000,000 annual holding cost, KRW 100,000,000 horizon land proceeds, and KRW 3,000,000 sale costs.
The renovation path assumes KRW 68,000,000 initial cost, KRW 10,000,000 confirmed support, a KRW 10,000,000 tenant deposit, KRW 800,000 monthly rent, 10% vacancy, KRW 3,000,000 annual owner cost, 2% annual rent growth, KRW 160,000,000 horizon sale proceeds, and KRW 5,000,000 sale costs.
Present-value results for the synthetic example| Synthetic strategy | NPV | Nominal net cash | Rank |
|---|
| Sell as-is now | KRW 78,000,000 | KRW 78,000,000 | 2 |
| Demolish, hold land and sell | KRW 62,275,107 | KRW 79,000,000 | 3 |
| Renovate, rent and sell | KRW 97,795,221 | KRW 126,962,907 | 1 |
In that synthetic case, break-even monthly rent is KRW 403,811 and break-even vacancy is 54.57%. Those outputs merely validate the formulas and interface. They do not describe any district, property type, contractor, public programme, or future market.
Korean legal boundary reviewed September 1, 2026
Building Management Act demolition procedure
The current-law anchor used here is law ID 013478, MST 266691, effective June 4, 2025. Article 30 generally requires permission to demolish a building. A report route can apply to a whole-building demolition only within statutory conditions, including gross floor area below 500 square metres, height below 12 metres, and no more than three floors above and below ground in total. Location, ordinance, and other exceptions can still change the route, so this calculator makes no permit-versus-report determination.
Article 33 requires a completion report within 30 days from the legally relevant completion point: the demolition supervisor completion report for permission work, or completion of demolition and waste removal for report work. The Building Management Act Enforcement Decree anchor is law ID 013742, MST 284661, effective March 24, 2026.
Statutory vacant-house definition and local action
The Special Act on Vacant Houses and Small-Scale Housing Improvement anchor is law ID 012805, MST 284083, effective July 1, 2026. Article 2 generally defines a vacant house as a dwelling that the mayor or county head confirms has remained unoccupied or unused for at least one year, subject to statutory exclusions. An owner-described vacant property is not automatically a statutory vacant house.
Article 11 allows local action under specified safety, sanitation, scenery, and living-environment conditions. The calculator does not decide whether an order, direct demolition, compensation, registration correction, or any local measure applies. A potentially dangerous structure requires prompt authority and professional review regardless of its NPV ranking.
Rural vacant-house action and limited support basis
The Rearrangement of Agricultural and Fishing Villages Act anchor is law ID 000478, MST 276431, current at the review date. Article 65-5 can support an order to demolish, rebuild, or repair a qualifying rural vacant house, generally with a stated action period, and may allow direct action and cost recovery in statutory circumstances.
Article 66 is not a universal demolition grant. It can prioritize rural housing-improvement funding in a specific case, including an owner who complies with an Article 65-5 demolition order and seeks housing improvement for farming. Confirm the current local programme and actual decision rather than converting that legal basis into an assumed KRW amount.
Asbestos and construction waste
The Asbestos Safety Management Act anchor is law ID 011384, MST 276749, effective October 1, 2025. Article 25 provides a basis for surveys of slate facilities and possible support for some or all eligible removal, processing, or improvement cost. Article 27 concerns disclosure of specified asbestos removal work. The calculator does not identify asbestos, design a survey, decide legal applicability, or validate a contractor.
The Construction Waste Recycling Promotion Act anchor is law ID 009592, MST 276695, effective October 1, 2025. Article 17 can require an applicable discharger to prepare and report a waste-treatment plan covering categories, expected quantities, separate discharge, and recycling. Confirm scope and documentation with the competent authority and qualified waste businesses.
What the 2026 vacant-house support announcement does and does not say
On May 25, 2026, the Ministry of Agriculture, Food and Rural Affairs and the Ministry of Land, Infrastructure and Transport announced online access to a vacant-house demolition support programme through the national vacant-house platform. The described model can involve a local government directly carrying out demolition when land is made available for public use, such as parking or a garden, for a specified period. Site condition and documents are reviewed before final eligibility is confirmed.
The announcement does not establish one nationwide fixed KRW grant for every vacant home. The calculator therefore starts support at zero and applies an entered amount only after the confirmation box is checked. If the municipality performs work directly, use only a defensible value of the owner cost actually avoided and do not also deduct the contractor invoice as though the owner paid it.
Quote omissions that commonly reverse a result
Demolition scope
- Building, foundation, basement, retaining wall, paving, trees, and underground obstruction boundaries
- Waste sorting, loading, weighbridge records, haulage, licensed treatment, and excess-quantity pricing
- Asbestos survey, containment, removal, measurement, transport, disposal, and reinstatement where applicable
- Scaffolding, dust and noise control, water spraying, traffic management, neighbour and road protection
- Demolition plan, engineering, supervision, permit or report, completion report, utilities, and building-record closure
- VAT basis, insurance, financing, access limitations, provisional sums, and change-order approval
Renovation and rental scope
- Structural investigation and provisional repair for foundations, frame, roof, moisture, and concealed damage
- Electrical capacity, water, drainage, wastewater, heating, ventilation, windows, insulation, and fire safety
- Design, supervision, filings, inspections, insurance, waste, cleaning, temporary protection, and contingency
- Relocation, bridging finance, construction delay, lost rent, tenant acquisition, and initial defects
- Owner-paid tax, insurance, management, repairs, brokerage, interest, and major-renewal reserve
- Deposit protection, lease terms, refund funding, horizon sale readiness, and transaction costs
Decision scenarios
Co-heirs want a prompt exit
An as-is sale may have a lower modelled NPV but avoid years of shared funding, maintenance responsibility, approvals, tenant management, and family conflict. Keep those non-cash constraints in a separate decision record. If the NPV gap is smaller than quote and valuation uncertainty, execution simplicity can be more important than a narrow model lead.
The owner sees an online demolition-support notice
Do not check confirmation because an application page exists. Ask the competent city, county, or district whether this property is in scope, whether land must be provided for public use, who contracts and pays the demolition business, which costs are recognized, and when a final decision is issued. Enter only the confirmed owner-cost reduction without double counting.
Renovation appears to dominate
Read the 110% cost and plus-10-point vacancy sensitivity cell before celebrating the base result. If the advantage disappears, obtain structural investigation, a clearer provisional-sum process, a realistic construction programme, and multiple local rental comparables. Also test a lower horizon sale value manually because the built-in grid varies only cost and vacancy.
Interpretation mistakes to avoid
- Do not reuse one optimistic appreciation assumption for the current home, cleared land, and renovated home. They are different assets with different buyer pools and evidence.
- Do not subtract the tenant deposit from renovation cost and forget the refund. The calculator records the receipt and repayment separately, but the owner still needs a reliable refund source.
- Do not enter interest as an annual cost while omitting loan principal repayment or horizon balance. This calculator does not generate a debt schedule; reconcile a separate loan schedule with these cash flows.
- Do not treat a public programme legal basis as an awarded amount. Budget, local rules, property condition, documents, selection, delivery method, and public-use obligations can change the actual benefit.
- Do not allow safety risk to wait for an economic ranking. Contact the competent authority and qualified professionals promptly when collapse, fire, contamination, trespass, or neighbour danger is plausible.
- Do not treat the discount rate as a magic risk adjustment. Show uncertain construction cost, vacancy, rent, sale values, and timing directly in scenarios and source notes.
Frequently asked questions
What support amount should I enter by default?
Enter KRW 0 until the competent authority confirms this property, the programme route, conditions, recognized scope, amount, and delivery timing. The May 25, 2026 national announcement provides an online route and describes local review; it does not promise one fixed amount for every vacant home.
Is every unused home a statutory vacant house?
No. Article 2 of the relevant Special Act uses an authority-confirmed period of at least one year and statutory exclusions. Programme definitions and evidence can add further conditions. Ask the competent local office rather than relying on the everyday label “vacant house.”
Does the tool determine whether permission or a report is required?
No. Article 30 includes size conditions for a report route, but local context and statutory exceptions matter. A demolition plan and other procedures can still apply. Confirm the current route, documents, supervision, asbestos, waste, utilities, completion report, and building-record steps with the authority and qualified professionals.
Why is the tenant deposit not renovation income?
It is cash received with a refund obligation. The model records it at year zero and deducts the same amount at the horizon. Actual lease timing, deposit protection, an earlier tenant exit, refinancing, and refund funding remain outside this simplified annual model.
Why does the calculator not estimate Korean taxes?
Tax can depend on acquisition basis, inheritance and co-ownership, home count, land and building classification, holding period, rental activity, actual expenses, and transaction details. A generic rate can reverse the comparison incorrectly. Add only a case-specific cash estimate confirmed by a qualified adviser to the relevant sale or annual-cost field.
Can I choose the highest NPV immediately?
No. Resolve every evidence warning, inspect the annual cash requirement, compare the NPV gap with quote and valuation uncertainty, and review the sensitivity grid. Then consider safety, permissions, co-owner consent, funding, management ability, lease risk, and timing with the relevant professionals and authorities.
Recalculate when the evidence changes
The useful output of an early comparison is a document request: a safer site assessment, a complete demolition quote, a complete renovation quote, a written support decision, conservative rent and vacancy evidence, independent exit values, and case-specific tax and finance cash flows.
Update the inputs as those documents arrive. Share the annual cash-flow table and the downside sensitivity case with co-owners and advisers so that the next decision is based on the same scope and date.
Official-law and programme review date: September 1, 2026. This Korea-specific planning calculator is not legal, tax, valuation, lending, construction, safety, or investment advice.
Method reference: NIST Handbook 135e2025.