You bought your current house after living in a tiny downtown apartment and eating out most of the time. Now you want a bigger kitchen with an open plan for hosting dinner parties in your home.
It’s becoming clear to you that an older (or younger) family member will soon be moving in with you.
You bought your home before having kids and now all your living space is filled with toys.
You’ve watched a lot of HGTV and want things that your home doesn’t have, but could.
These are just a few of the reasons I am hearing more and more homeowners struggling with the question:
“Should I renovate my current home or buy a home that already has what I need and want?”
While I wish I could sit down and write simple answer to this question, your answer depends on many factors. Let’s try and figure out what factors are worth considering when grappling with this complex question.
List the problems with your current home
If you’re considering whether you should renovate or move, there must be a reason that your current home is not meeting your current needs. Have there been changes to your family? Your job? Your interests? Make a list of the things that are no longer meeting your needs.
If the location of your home is a problem, you should consider moving. That is the one thing that you can not improve with a renovation.
If you feel as if you may have outgrown your home, try doing a major spring clean out. Get rid of all the items that you no longer use. It’s amazing how much space you have when you get rid of your excess stuff.
Take a look around your neighborhood. Are there homes in your neighborhood that have what you want and need? Or homes where the owners found solutions to similar problems? Can you go and look at their renovations? Ask permission to take pictures of what you like. Ask who did their renovation.
Identify possible solutions
Once you’ve identified the shortcomings of your current home, it’s time to identify some possible solutions.
Call a home builder/remodeler to come to your home to tell you if the changes you’d like to make seem feasible and give you a ball park estimate of what the renovation might cost. Of course this ball park estimate will be lower than what it will actually cost so add 25% to the estimate and use that number as your starting point.
If you were to spend that amount of money on your home, would your home be the most expensive home in your neighborhood? Would you get the money back when you try to sell the home?
How long do you plan to stay in this home? Will the renovation extend how long you might stay in the home? Is the extra monthly expense a good use of your money? Will the renovation solve all of your issues with the property?
Can you afford the solutions?
This would be a good time to talk with a mortgage lender to see if you could get a loan for this renovation. There are ways to finance the renovation with the equity in your home. You might be able to refinance the home or use a renovation loan to provide financing as stages in the renovation area completed.
Do you want to amortize the renovation over 30 years? You might also be able to pay for smaller renovations out of your savings or using a credit card. The builder/remodeler may have financing options available as well.
Of course, if you can’t afford to make the changes that you want, you may have to take some time and save up for the project.
Time for some comparison shopping
After completing the steps above, you are in a good position to do some comparison shopping. Start in your neighborhood and then expand your search out to other desirable locations.
Are there homes in your neighborhood that meet your needs? How much do they cost? Will the price of your renovated home be similar in price to these homes?
If not, conduct a quick search to see if there are homes outside of your neighborhood that meet your needs. You might just find your dream house is out there and more affordable than you think.
Other things to consider
There are other factors that play into your decision.
Decisiveness – You should take a moment to think about the decision makers for this renovation. If you will be making the decisions alone, are you going to be able to stick to a budget, or are you going to want to upgrade everything because this is your forever house? If you and another person will be making decisions, will you be able to agree on things quickly? Costs go up when there are delays. Builders make tile selections based on the availability and pricing. Home owners often upgrade when given the option.
Disruption – Depending on the type of renovation you are planning, you may have to move out of the home, eat out a lot or change your routine during the renovation? How well will your family handle this disruption? Can you afford to pay rent somewhere else during the renovation? Construction may also take a toll on your landscaping. Be sure to calculate that into your cost equation.
Management – Who will take on the management of the renovation? Is that person suited to that role? Will someone need to be at the home while the work is done? What is the cost or toll that will take on you?
Evaluation – Don’t be afraid to identify a variety of other solutions and evaluate them as well. I think it’s important to thoughtfully consider whether or not the renovated home or purchased home you can afford will actually solve all or enough of your problems that you will be satisfied. It may be cheaper to knock your house down and have a builder build a model on your land.
Ask for advice – The builder may have ideas that solve your problems and are more marketable when you sell your home in the future. Consult with a real estate professional to make sure your renovation will have appeal to buyers and not price you out of the market. For example, reducing the number of bedrooms can have a negative impact on the appeal and more importantly, the value of your home.
In the end, finding the answers to these questions will help you determine whether you should renovate or move.
If you are looking for help deciding whether you should renovate your current home or move to a new one, give me a call to Get Started.