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Message
Remodel for sq footage increase or save cash?
Posted on 5/5/21 at 2:26 pm
Posted on 5/5/21 at 2:26 pm
I live in a neighborhood in Lafayette area where price per sq ft is creeping up nicely. I cook a lot and I use my backyard to entertain. I've gotten an architect to draw up plans on a indoor/outdoor expansion that would give me roughly 600 more sq ft at a price of 210 per sq ft in my neighbor HVAC spaced with la catina doors and a new bar.
Its roughly a net increase on my home of 130K. Price of the project is 120k.
It eats into my free cash reserve for the incoming crash.....
Should I save the cash for the incoming dip or do the remodel and build it into the home's value???
Its roughly a net increase on my home of 130K. Price of the project is 120k.
It eats into my free cash reserve for the incoming crash.....
Should I save the cash for the incoming dip or do the remodel and build it into the home's value???
This post was edited on 5/5/21 at 2:28 pm
7
Posted on 5/5/21 at 3:04 pm to L S Usetheforce
a couple of things to consider...
the price of material is at an all time high
if there is a dip you speak of, then there will most likely be a dip in the real estate market and you now just paid 120k for something now worth 80k, or whatever. so you will have bought high and sold low of sorts.
i've remodeled 3 houses and done an addition on one. We did it because that's how we wanted it. i say if you are going to enjoy the space then do it and don't look back. but if it's solely about money, tough call
the price of material is at an all time high
if there is a dip you speak of, then there will most likely be a dip in the real estate market and you now just paid 120k for something now worth 80k, or whatever. so you will have bought high and sold low of sorts.
i've remodeled 3 houses and done an addition on one. We did it because that's how we wanted it. i say if you are going to enjoy the space then do it and don't look back. but if it's solely about money, tough call
Posted on 5/5/21 at 3:13 pm to L S Usetheforce
Been weighing this as well with a similar sized project. 3 months ago I was gung-ho about moving forward with the project, but I am starting to lean towards putting it off until 2022.
Construction costs should drop next year, so even if the housing growth slows your breakeven/profit point will be lower as well. I am also really concerned about materials for the project. I don't have a good place to store everything on site and with the supply chain issues I don't want to get stuck with a half finished project that is waiting 8-10 weeks for backordered materials.
Construction costs should drop next year, so even if the housing growth slows your breakeven/profit point will be lower as well. I am also really concerned about materials for the project. I don't have a good place to store everything on site and with the supply chain issues I don't want to get stuck with a half finished project that is waiting 8-10 weeks for backordered materials.
This post was edited on 5/5/21 at 3:15 pm
Posted on 5/5/21 at 3:14 pm to L S Usetheforce
Just invite me over whenever you’re done if you do it. I’ll bring the bourbon.
Posted on 5/5/21 at 5:17 pm to L S Usetheforce
With no foreclosures for a year, when the banks can finally start foreclosures again I think you are going to see the supply issue in housing go away and prices start to drop, which may also help with material costs. If it were me I'd wait and let that play out before doing any major construction projects.
Another option for your cash could be to pick up a foreclosure to use as a rental property.
Another option for your cash could be to pick up a foreclosure to use as a rental property.
This post was edited on 5/5/21 at 5:21 pm
Posted on 5/5/21 at 5:33 pm to L S Usetheforce
Materials and labor are at an all time high. If you are staying in this home forever or a long time go for it if you really want it. You likely can have it done cheaper if you can wait. Do what you want not what people on here tell you to do every situation is different.
Posted on 5/5/21 at 6:09 pm to L S Usetheforce
save your cash, you WILL need it
plus waiting will only give time for the cost of materials to drop after the recession is over, that alone could save you well over $10k plus of the reno costs
plus waiting will only give time for the cost of materials to drop after the recession is over, that alone could save you well over $10k plus of the reno costs
Posted on 5/5/21 at 8:09 pm to L S Usetheforce
Additions are just junk that the next buyer knocks down
Posted on 5/6/21 at 9:14 am to FishinTygah84
quote:
i've remodeled 3 houses and done an addition on one. We did it because that's how we wanted it. i say if you are going to enjoy the space then do it and don't look back
Homes are a weird mix of consumption and investment. Outside of surface things around the time of sale (landscaping, paint, etc), I wouldn’t generally put money in to expect it back out or to appreciate. I would put money in for things I want and things that don’t decrease the value of the home if I could afford them, and I have a few of these projects upcoming on a much smaller scale- a generator and drop-down screens on a patio. I don’t think these are going to hurt at all. They should increase value or, at the very least, make the place easier to sell. But the most important thing is that my wife wants them (even though through three hurricanes we still haven’t lost power at this damn house).
If the money is there in your “investment” pile and not your “could spend comfortably” pile, I don’t think I would do it. Your home is unlikely to appreciate like the market for over the next ten years. It could. But that’s probably a much riskier position.
If it’s a large sum of money (and that’s a decent chunk to have available! Congrats! You are doing something right), and you are thinking of things to do with it and it appreciating from today to retirement isn’t the fulcrum on which your retirement portfolio balances and you just feel uncomfortable spending it, then knowing that you will probably get it back so long as you’re there another few years (and maybe more) may help you feel a bit better about pulling the trigger on it, especially if it’s something you really want.
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