Though your desires to upgrade your space are many, in reality, most home upgrades are a want–not a need.
This doesn’t make the desire to upgrade your home bad. As long as it fits into your financial goals, you can upgrade your living situation. As a matter of fact, most people do not live in their home longer than 13 years. So, this practice is quite common.
But should you sell your current home and buy a new one? OR Should you renovate and upgrade your current space?
Because the process of buying a new home is well documented and widely understood, this article will focus more on renovation. There are many common misconceptions about renovating a home that must be taken into consideration when attempting to answer the above questions.
Cosmetic changes to a home such as new flooring and paint aren’t a big deal. Anyone can execute a beautification upgrade like this without the need to get things permitted. But anytime you start adding square footage, a permit is required. In some cases, when you move walls, a permit can be needed based on the plumbing or electric work associated with the project. The process of getting permits for renovations can be frustrating to say the least. The amount of paperwork and red tape you have to deal with is lengthy. This can bring on additional costs and frustration that you may not have assumed would be there before.
Can you do things unpermitted? Sure. And to be honest, it happens all the time. But aside from the legalities involved are the issues that come up when you eventually try to sell the home. We see it all the time. A seller is attempting to sell a home that is 2500 square feet. But, 500 of those square feet were added several years ago as part of a renovation. The problem is, the addition was not permitted. Now, when the buyer gets an appraisal on the home the appraiser sees a discrepancy between the measured square footage and the square footage permits on record. This is a BIG issue. This will dramatically decrease the value of the home as it now has to be sold as a 2000 sq ft home instead of a 2500 sq ft home. In addition, it can create red flags in the eyes of a buyer’s lender preventing a transaction from occurring.
If you want to upgrade your home, get the permits. It is not only a legal responsibility, but it will make your life easier when the time comes to sell.
DIY or Hired
If you have made it this far you may be thinking: “Ok. I understand permits are required, but I am not going to deal with that on my own. Dealing with that would decrease the quality of life! As a result, I am just going to hire a contractor to handle it all for me.”
Take it from a guy that has had trades people in and out of his house for months on end as part of a home renovation. It is a major disruption to your life and nothing ever goes as planned.
Doing it all yourself allows you to execute the renovation at a lower cost, which is great. But not everyone has the skills to make a renovation happen properly. Hiring professionals to handle things will likely result in a better finished product.
In most cases people are trying to live in the home while the home is being upgraded. The normal privacies and routines that you are used to get completely demolished as people come in and out of your house for weeks or months on end. And the mess and dust caused by the work is extremely annoying. As a matter of fact, there are some contractors that will not allow people to live in a home while it is being renovated because it also makes things inconvenient for the tradespeople doing the work. Though hiring people is a wise choice to delegate the permit work and ensure the end product looks it’s best, you should consider these other disruptions.
Depending on the extent of your renovation, you may have to find another place to live for a period of time, and that time is almost always longer than any initial estimate.
This brings us to the cost. Yes, the paint, drywall, lumber, fixtures, and other items require money. But the price of the permits, tradespeople, and additional rent/storage are costs that many don’t plan for. What’s more is the cost for all these items, especially the supplies, is almost always higher than people think. Sure, you can go to Home Depot and add up a few costs here and there, but the totality of the project materials is often a surprise.
A friend of mine recently purchased a new home. As part of the process he was looking at one particular neighborhood. But that neighborhood didn’t have any available homes with the square footage he wanted. “No problem!” he thought. “I’ll just add some square footage after I buy the home.” Seems like a good idea in theory, but on paper it is more cost effective to purchase the already existing square footage. In Arizona, your dollars will almost always go further by choosing to buy existing square footage versus adding square footage to an existing home.
So, should you upgrade your current home or buy a new one?
The answer depends on the depth of the upgrade you desire. Cosmetic changes are no big deal. But as soon as you get into adding square footage, you must take many other things into consideration.
Take it from a guy who is writing this blog from my current home that I renovated almost 10 years ago. It was a bigger project in money and time than initially estimated. And this rings true for so many others who I have seen go through this process. This is why I am in contract on a new home to meet the upgrade needs/wants my family is currently experiencing.
If you’ve made the decision to buy a new house, but want to make sure it’s a more permanent home, be sure to check out next week’s post where we discuss the biggest mistakes people make when purchasing their forever home.
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