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goodhome631

Move or remodel dilemma

goodhome631
12 years ago

We are a family of 4 (boy, girl, parents) living in a 1600 sq ft ranch. We also work from home (both parents need a home office) full time.

We are trying to decide whether to move to a bigger house or remodel our current.

PROs of our current house, encouraging us to stay and remodel:

- Beautiful flat backyard with privacy (lots of homes on ravines in our town)

- Not close to the freeway (an issue in this town)

- Great location: we are within 1/2 mile of grocery and stores, within 1 mile of all schools, and within 1 mile of library/community center (excellent location!). Our children will be able to walk to school until they graduate high school if we stay in this location

- Beautiful oak tree in front yard and nice brick ranch. We are in a wonderful quiet neighborhood.

CONS, encouraging us to move:

- House is too small and is old (built 1959 - we are the 2nd owners), requiring a MAJOR renovation if we move forward (removing plaster walls, etc.)

- 2-car garage (even for 2-car) is on small side). No real room to expand it (we have 3 cars)

- Neighborhood is all ranches like ours (we would be overimproving for our street).

Right now, we are leaning towards improving, however, because we just haven't found a great home that is in as good a location as ours. Plus, our plans to remodel include a wonderful master suite and brand new family room/kitchen in the back. Cost would probably be around $200k. We have a very low amount left on our mortgage and this would be doable.

My main concern is the disruption to our lives (most likely for close to a year) and the fact that we would definitely be overimproving for the neighborhood. We plan, at this time, to stay in the house (wherever we end up) for at least 20 years or even forever (barring unforseen circumstances).

Any thoughts?

Comments (19)

  • scrappy25
    12 years ago

    Take your time to look around, you'll get a good idea of what you can buy and what you can sell at. You will probably always get more for your money by moving and the hassle factor is less, but can you find a lot and location just as good as your current location?

    We are in the same quandary but my husband does NOT want to move. I spent the last year looking around and have decided that out great lot and location supersede any advantages of a bigger home. However, our house is newer and is large enough most of the time, esp since our kids are heading off to college soon.

  • _sophiewheeler
    12 years ago

    I'd keep looking. That 200K is bound to make a difference in what you can purchase. If you spend it on your existing home, you will still have a 50 year old house with some new bits, which if something unforeseen happens and you do have to move, will never appraise like a 3000 square foot 20 year old home that the 200K could potentially provide you with. It's doubtful that you'd even get 20% of that 200K back as an increase in your appraisal.

    You'd be spending a lot for extra comfort and utility alone. Not to minimize what comfort and utility can do for a family, but when the kids are gone and it's time to downsize, will it be worth it to you to have spent that as an expense, not as anything remotely recoupable? And you'll have a more difficult sale to boot. When you are the largest and nicest home in the neighborhood, you always lose when it comes to comps at resale.

  • Billl
    12 years ago

    If this is a financial question, then the answer is pretty obvious. Over-improving is a huge money loser.

    Of course, not every decision is financial. It is certainly reasonable to pay a premium to live somewhere you love. Of course, that assumes you have $200,000 to pay for a lifestyle choice. If you have to borrow to do it, that would be a big red flag in my book.

  • lavender_lass
    12 years ago

    If this is your forever house, then the factors you listed as 'pros' will be very important. Yes, you may over improve for the neighborhood, right now...but if others also remodel that may not be the case.

    How difficult is it to sell a home, in your area? Is this location desirable to others...do they have flat lots? It sounds like there aren't a lot of great neighborhoods in your area, between the freeway and ravines, so this area might be a popular area and other houses will be 'over improved'.

    All of this is maybe...so if you don't plan to stay for a long time, I'd keep looking or do a much smaller, more affordable addition. However, if you love the location and lot, plan to stay for quite a while, and place a real value (I would) on the closeness to schools and safe neighborhood for kids to walk in...then I'd remodel and deal with the inconvenience and disruption. It will be well worth it, when you look forward to the many holidays and celebrations in your family home. There's a lot to be said for a home that can even be handed down to one of the kids, someday. Best of luck with your decision :)

  • pam29011
    12 years ago

    $200k is a big remodel. A couple questions to think about (not to answer here, they're too personal):

    1 - What do your & your spouse do for work?
    2 - What are the chances one of you would be offered a great opportunity in another area? What are the chances you'd take it?
    3 - How many other employers in your area hire people who do similar things - if you lost your job next year could you find another nearby, or would you need to move to keep the commute from becoming unbearable?

    Those are the things I'd really think about before spending that much money on a renovation. And as Bill said, if it requires borrowing money then it's even dicier to do it.

    -Pam

  • handymac
    12 years ago

    - House is too small and is old (built 1959 - we are the 2nd owners), requiring a MAJOR renovation if we move forward (removing plaster walls, etc.)
    - 2-car garage (even for 2-car) is on small side). No real room to expand it (we have 3 cars)
    - Neighborhood is all ranches like ours (we would be overimproving for our street).

    I hope there is a WHOLE lot more to the addition than a master and FR for $200K! Like almost a complete house more.

    You have three cars now and cannot expand the garage.

    Over improving would be costly when selling is necessary.


    Time for wanting/wishing to be dumped. You need to think long and hard about what you need to do---not what you want to do.

    At best, your working from home will be severely impacted.At worst, trying to live in a house that is being extensively renovated can cause divorces and other extreme family problems.

    If you both work from home, does it really matter where you live? Could you both work in another city? Another state?

    I understand how people often do not like to move. I now live in an area where people have been born and died in the same house. Never left this school district.

    But, moving can actually be beneficial. There are actually better neighborhoods and cities out there. Or at least as good.

  • weedyacres
    12 years ago

    What is your house worth today?
    How many square feet is your house?
    How many square feet would you be adding?

    What's the age, price and square footage of the houses that you're looking to upgrade into (even if the location isn't ideal)?

  • goodhome631
    Original Author
    12 years ago

    thanks for your comments, everyone. Our house is about 1600 sq ft (ranch), 3 bedrooms, 1.5 baths.

    We want to add:
    3 bedrooms upstairs/2 full baths
    family room/kitchen in back
    We will take 1 bedroom away downstairs for a master suite bathroom.

    In the already-built house, we plan to keep one bedroom as-is (it will become an office for us both).

    The 2nd bedroom will become a bathroom for the master suite (our current 3rd bedroom).

    The current full bath will become a walk-in closet for the master suite.

    So we will end up with 3 bedrooms/2 full baths upstairs, 1 master suite downstairs with an office next to it. We will have a brand new family room/kitchen in back (current kitchen will become a mudroom/laundry room/1/2 bath/pantry). We will still have a dining room and formal living room.

    We are so excited about this plan! It has been the work of about a year's worth of discussions between us (we have some basic software and DH is a DIY-er, plus we have remodeled in another house before).

    We are indeed looking at other houses. However, what we would like will probably cost us close to $400k if we moved.

    Our current house is worth $180k and we have about $60k left on the mortgage. It may be easier for us to get a home equity line of credit than it would to come up with a 20% down payment on our own.

    My job is fairly stable (been at it 10+ years, industry doing well). DH owns a successful franchise with a decent outlook.

  • live_wire_oak
    12 years ago

    200K is a VERY LOW estimate to do all of what you want. I doubt that you can do but the absolute builder grade basics, and even then a good portion of the project would probably have to be finished at a later time. You're probably talking more along the line of 350K plus. You might as well do a teardown and build completely new for the amount of original home to new home ratio that you want. You could probably do a new build with all new everything for similar money if you were modest in your plans. Remodels usually cost twice what new construction costs due to the interlacing of the new and the old.

    To do this, it would have to be a 100% cash build. No bank will ever be on board for this. You will not be able to get a loan for a project that costs more than your current home is worth. Especially in an neighborhood of sub 200K homes. You might get a loan for 80K, which is 80% of your home's value minus your loan amount, but that will barely do a kitchen remodel. If you were in one of the prime infill neighborhoods where older homes on larger lots are being subdivided, you would have a greater success in pitching the virtues of a teardown. But, your neighborhood won't support those plans either.

    Remodeling this home is a pipe dream best left to dream status. Your best bet is to move. You don't ramp up to the full 400K difference right away. No one ever buys their dream home for the second or third home they own. You buy an intermediate home. One with more space, but that you can still afford. You stay in it for 4-5 years, accumulate equity, and then sell it and use that to go to a higher priced home with more features you desire. You'll get to the home you really want eventually. It's called delayed gratification and seems to be out of fashion these days.

  • chisue
    12 years ago

    We found our perfect lot, in our perfect town, in our favored neighborhood. It came with a 1950's ranch -- poor insulation, plumbing, wiring, old mechanicals, small baths and kitchen, 8-foot ceilings. We thought we'd remodel it, but we tore it down and built new instead.

    Our all-new house is worth a lot more than any old-plus-new house. It is tight, with all new plumbing, wiring, mechanicals and 9-foot ceilings. The bathrooms, kitchen and closets are big. We didn't live in a state of chaos for over a year.

    Think about the value and product you will have at the end. Talk to some realtors about market value for a remodeled vs. an all new home. When people start talking about doubling the size of an existing house via remodeling, it's usually time to think about moving -- or tearing down.

    Do the neighboring homes support the larger home you plan? You don't want the most expensive house in the area.

  • _sophiewheeler
    12 years ago

    If you wanted a 600K house, you should have bought a 600K house. You don't get a 600K house by spending another 400K on a 200K house in a 200K neighborhood. You get a 250K house (if all of the stars align right) by spending 400K to remodel a 200K house in a 200K neighborhood. And then it takes 3 years to sell if it ever has to.

    Large remodels hardly ever make good sense from a financial standpoint, but this proposal is particularly ludicrous. LWO is right about your having to do this on a cash basis. The banks would laugh themselves to death over this.

  • jamaraz
    12 years ago

    I think it depends. We struggled with the same decision. We ended up staying and remodeled our current house. I put about 100k into my house that I will never get out. However, the houses that were acceptable to move to (not my dream house) were 300k more than my house and still needed work. Those homes were a better financial investment for the future but they would have put us in a less comfortable financial position and still have not been our dream house.

    I say if 200k is more comfortable than a 400k move and you are happy with your location, then stay where you are and hope you can recover a portion of your investment.

  • doug_gb
    12 years ago

    There's a difference between "Remodel" and "Rebuild".

    You will have spent $200k, and increased the value of your home by $50k. Not a good investment.

    Nobody is going to want to buy a $400k home in a $200k neighborhood. As I visualize your redesign - it would be the 'monster' home on the block.

    Find a bigger home.

  • lavender_lass
    12 years ago

    LWO- I'm curious...how do you know how much construction will cost in Goodhome's area? Do you live nearby?

    Hollysprings- How do you figure that a house that is worth $180,000 and an addition for $200,000 is going to equal a $600,000 home?

    While it's great to offer feedback to the OP...I'd like to see where you're getting your facts :)

  • weedyacres
    12 years ago

    My back of the envelope math says:
    $180K house + $200K + sweat equity + living in a mess = $380K house (if you're lucky, given that it'll be the nicest house in the neighborhood) with a $260K loan.
    OR
    $120K down payment (equity in your current house) = $400K house with a $280K loan.

    I vote for no-muss-no-fuss option B. And we're DIY'ers that completely remodeled a 4000 sf house (that started out the cheapest house in the neighborhood).

  • juliekcmo
    12 years ago

    I agree that financially it is a poor decision, unless you live in a neighborhood that has the ability to become a 400-600K neighborhood. And that is not very likely.

    You also have not considered that your neighborhood may become less desirable, as it is now full of 40-50 year old houses that many families will consider "too small"

    If you want to stay, and like the house OK, but need the office space, then consider adding a garden shed style office space, or renting a commercial office space. Either would be way less money than the remodel.

  • Susan
    12 years ago

    i'm in the same position as the original poster, and am probably going to remodel despite it all.
    though in my case my area will appreciate, of that i have no doubt.
    still, i've already got the best backyard on the road, so i may as well ahve the best house.

    op, if this house has so much going for it, and you've been working on your plan for long enough to really have a feel for living in it happily--than i would do it.
    being happy in your home for the next 20 years is damn important!
    and who knows, perhaps you'll be there in your dotage---make sure you have the first floor rooms all handicapped usable, so when you're ninety years old with bad knees you can still live in your dream home!
    maybe build with an eye to adding an apt for a potential helper even, or income.
    being happy counts for a whole lot in my book. sadly, life can be too short to wait for it.

  • kaismom
    12 years ago

    You will not make money in the long run. If you are happier for doing it, why not.
    I have overimproved my house and I will not get the money out.

    The best thing I could have done is to tear down and build a house that I would have really loved rather than be limited by the house that was there. In the long run, it would have cost about the same.... This is with the benefit of hind sight. For those contemplating a large remodel, you should seriously look at the tear down/rebuld scenario. You will be surprised how little difference there is in the cost...

    A big con of remodeling is that you will have to find another living situation. If you rent, you have to factor that into the cost of construction/money needed. (12 months x $2000/month to rent plus the moving cost..) In our town, $2000/month gets you very little in terms of a rental house. Probably 2 or 3 bedroom with 1 bath.

    If your budget is tight, then you also have to factor in what happens when you run out of money. I know several people that have started their projects and could not/did not finish. They have lived in (and are living in) unfinished houses. This is extremely stressful for most people. In our particular situation, we had to break up the project into multiple phases due to finance.

  • finallyrenovating
    12 years ago

    I was very interested to read this particular thread. We have been in "thinking" mode for years. After personal financial setbacks and then the larger economy setbacks we felt we really needed to make a choice. We live in an area where MANY houses are being sold to builders to tear down and rebuild. Long story short, our house needed repair, but we did not think it was wise to use ALL of our equity and wanted to keep the payments down in case of serious illness, setbacks, etc. I hope we've made the right choice, but we are putting money into repairs and a very small addition (family room below, master bath and w/in closet above, new siding, windows, driveway and patio)because we love the neighborhood and want the family room for our grandchildren(our space is limited). We are also putting a shower on the first floor in case of illness. This was a tough decision all around and I would urge anyone thinking about it to consider finding a budget wise architect to draw a schematic (not free, but it will take a lot of wishful thinking out of the plans). The hardest part is knowing how much your plan might cost, I think. But if you can part with the neighborhood, you might be better off moving. Just don't forget that real estate agents are not free. I hope our decision pans out, but I'm not looking at it from a strictly financial standpoint either. We are not creating a goldmine or building the remodel of our dreams- just concentrating on what we needed. It's a tough choice and our plans got downsized before we finally went ahead. We do not have to move out, but that required compromise on the plans. It sure would be nice to have that crystal ball to see how it all works out, but the architect and the builder are doing a great job.

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