His new home became a cosy demountable on his step-daughter’s peaceful rural property in Elizabeth Street.

The “active and healthy” 72-year-old would regularly pop into the main house to have dinner, loved working in the garden and would feed the birds from a verandah he built himself.

But just before 2am on Friday, Karl’s home became engulfed in flames while he was inside. Neighbours have described being woken by loud explosions ‘‘that sounded like gunshots’’ and seeing smoke fill the air.

Firefighters worked for more than an hour to extinguish the blaze but the small tin structure was gutted and Karl’s body discovered.

Police set up a crime scene following the incident and continued investigations throughout the day to try to determine how the blaze started.

A dog from Fire and Rescue NSW’s canine unit was brought in to assist with locating the origin of the fire.

Whether the incident was suspicious could not be ruled out until the cause was known, Central Hunter crime manager Detective Inspector John Zdrilic said.

On Friday, Karl’s step-granddaughter, Sarah McAllister, paid tribute to her ‘‘Poppy’’, describing a talented tradesman who loved the outdoors and was always thinking of what he could do for others.

She said he was Swedish and moved to Australia from Finland many years ago with his family, which included her mother Aria Hamilton, who was aged six at the time.

“He was her step-father but he always treated her like a daughter,” Sarah said.

“He virtually raised my mum, he has been her dad since she was two or three years old.”

Sarah said Karl was “always on the go” and didn’t let age slow him down.

“He was very strong and fit and loved being outdoors,” she said.

“After my Nan died we brought him down here to be closer to family.

“My step-father owns a mowing business and my Pop would help him around the yards and make sure the gardens stayed nice.

“They would have meals together and stuff like that.

“He was a great welder and tradesperson.”

Sarah said that Karl developed a strong bond with her son Lucas, who is aged three.

“We’re all still in shock, it hasn’t sunk in,” she said.

Neighbours told the Newcastle Herald they were saddened by the tragedy.

Megan Jensen said she was woken by explosions she initially thought were gunshots.

“My partner thought it might have been someone out culling kangaroos,” she said. “He went outside with his father and they told me they saw fire and black smoke coming from the house.

“They called the police but they were already on their way and arrived a couple of minutes later. I can’t imagine what the family is feeling.”

Another resident, named Kay, said she would regularly walk her dog past the home and say hello to Karl, who would be out working in the garden.

“He was a very nice man who would always wave and smile,” she said.