Should you move or improve? That is the million dollar question.
When your family is growing, or you begin questioning whether or not those little quirks in your home are still charming, you may start to wonder whether you should move to a larger home or simply invest in renovating it.
Your home no longer fits your needs, and you can’t go on denying this fact any longer. Regardless of what these needs are, a decision needs to be made – one that is worth a ton of money.
Here is some sound advice to help you decide what route is best for you.
Find Out if You’re Legally Able to Expand
First of all, you need to make sure you’re even legally able to expand your home. Find out if the community you live in allows additions, and what the limits are on how large a house can be relative to the size of the land it sits on. If your home is already as big as it can legally be, an addition is essentially off the table.
Instead, you’ll need to work within the footprint you’ve already got, or you’ll have to relocate.
Will an Addition Make Financial Sense?
If you find out that you are legally able to expand your home, your next task is to determine whether or not such a decision is a good financial move.
Get yourself a cost estimate to find out what the price tag will be like to make the changes to your home that you have in mind. Once you’ve got that number, figure how much the addition would add to the value of your home. Then compare this new value with comparable prices of similar homes in your neighborhood. It may just be that you won’t get a decent return on your investment.
While having a larger home would certainly accommodate your needs, you don’t want to expand to the point where your home is basically the elephant on the block. You don’t want to have a home that’s twice the size of all the other homes on the street – the value simply won’t be there.
You need to strategically decide if your investment will still be worth that much a few years down the road. For instance, you don’t want to put $250,000 into your home when it won’t even be worth $200,000 in five years.
Neighborhoods can only support so much cost for a specific home. If home buyers have $400,000 to spend on a house, they’ll most likely look to an area that is made up predominantly of other $400,000 homes, instead of $250,000 homes.
Just make sure that you are bringing your home up to – or only slightly above – the standards in your area. If that’s the case, renovating just might be a great idea from a financial point of view. But if your home is already the biggest, nicest home on the block, expanding it even more probably won’t result in any payback on resale.
Make Sure the Renovation Will Boost Your Home’s Value
Whatever remodeling job you decide to pour your money into, make sure it will add value to your property. This can help offset the expense of the job you plan on taking on. Speak with a seasoned real estate agent who is experienced in buying and selling in your particular neighborhood. He or she will be able to give you pointers about what upgrades hold the most value in the are, and which ones don’t.
For instance, if most of the houses in the area are 3-bedroom homes, and yours only has 2, it would probably make sense to add that extra bedroom to bump up the value of your property. On the other hand, if the majority of the homes on the block are ranch-style bungalows, and you decide to add a second to your home, you might not be able to recoup that investment money come sale time. It simply depends on what buyers in your specific neighborhood hold value to.
Some renovation jobs bring back a sizable return on every dollar spent, while others don’t. Do the math on your particular renovation job to determine if the return on investment is a healthy one.
This is a matter of land value versus structure value. It’s the land that appreciates the most – the house not so much.
When Moving Makes More Sense
There are a ton of things you can do to your home to improve or upgrade it. But there are certain things that cannot be changed – namely, the location. Analyze the size of your land, the schools in the area, the greenery, and other factors – these are things that can’t be altered. If you can’t live with these factors, then moving probably makes the most sense.
Not being a fan of your neighborhood isn’t the only thing that might prompt you to start house hunting, either. Maybe your home was built decades ago when lead paint and asbestos were the norm in home construction. These are things you definitely don’t want to touch, especially when renovating.
And while moving might not necessarily be easier than renovating, it’s definitely a lot faster. It’s simply a matter of what would make the most financial sense for you, what would ultimately cause the least amount of stress, and what would provide you with exactly what you’re looking for.
A house, while still an investment, is really all about lifestyle first and foremost. The decision to move versus renovate is comes down to this: will your existing home – after renovated – make you and your family happy? If not, and you can afford something different, then moving might be the right decision.
Just make sure this decision is not made without the help of professionals, like a contractor, financial advisor, and real estate agent.