This is the date we can break ground on our BIG house renovation and turn our starter home into our forever home.
BB has a secure job, and once you are in a coaching position- you are in- unless you really mess up. So I feel comfortable budgeting our income for the next few years based on his current income.
Based on BB's salary, mine and our other sources of income- I think we can save $48,800 by Jan 2013 (I saved $1200 in 2009).
We have not gotten formal estimates on prices but feel that $50k will get us about what we want to do.
We want to:
Enlarge our kitchen from the galley it is currently, back into the room next door where it was located when it was originally built.
Put a staircase inside connecting the upper and lower floors to return it back to a SFH rather than the duplex it is now.
Turn the top floor galley kitchen into a laundry room, and use the adjoining guest room to turn into a master closet/bath.
Repair the upstairs plaster walls.
It may come out to more than $50k but if it does we can see about using other resources to cover the difference. We dont want top of the line- middle of the line cabinets/appliances is what we have in mind.
The part that I wonder about is over improving for the neighborhood. We live in a low income area. Our next door neighbor purchased and remodeled his house during the height of the market and has $318k invested in the house. His house is the nicest in the neighborhood and maybe worth $250k. His finishes are about where we want to get our house when we do our renovation.
If this is indeed our forever house- then it shouldnt matter if we overimprove...right? Especially if we pay for the improvements in cash?
I guess I wonder which way the neighborhood is going. 3 yrs ago the city invested several million dollars into rehabbing our neighborhood. The town said its historical significance and it being an eyesore qualified it for huge grants. The area was resored beautifully. The victorian and craftsman houses belonging to families got fresh facelifts, and many people purchased rehabbed houses in the belief that the value would increase. The houses are all worth a lot more than the outlying houses that did not get fixed up- but the people in the fixed up houses are letting their houses deteriorate again.
Everyone in the area owns their house outright from generations where the house has been inherited, but that does not mean the residents have enough money to do the repairs needed. If a house goes up for sale in the area- it sells for a good price- but houses here dont go up for sale very often because the residents dont to want to leave the block that they grew up. Only 1 house in the area went up for sale over the year I have lived here. So it is not very often that a person/family moves into these houses with incomes that qualify them for loans on these houses and the subsequent idea that they have the financial ability to maintain the house.
I guess I have another 2 years to mull it over.
January 2013
December 8th, 2009 at 03:29 pm
December 8th, 2009 at 04:54 pm 1260291243
December 8th, 2009 at 04:56 pm 1260291364
Thing is, if you can afford it, you want to do it, and you can pay cash. IT shouldn't matter. You should just be okay with the fact that it won't necessarily increase the house value by a lot (though it will make it more attractive and easier to sell).
On the other hand, if you don't want to put in money you won't get back, then I wouldn't do it.
The last house we almost bought was WAY over-improved for the neighborhood. The seller had originally asked almost double what it sold for (bad market timing too - but I don't know why their realtor let them list a $800k house in a $400k neighborhood. IT was crazy. It sold for about $500k in the end). Point being, it fetched a nice premium, BUT nothing in line with the money they put into it. No one with $800k, or even $600k, was going to settle for that. There are better neighborhoods and houses, in THAT price range.
December 8th, 2009 at 05:01 pm 1260291704
If we over-improved- I think it would only be a $20-30k overimprovement- rather than the $300k overimprovement you mentioned. And this is a house that I love.
December 8th, 2009 at 09:20 pm 1260307235
No, it shouldn't matter if you stay there forever, but that's the thing: none of us has a crystal ball that lets us see into the future, and for many, circumstances change in a way that's impossible to predict.
Still,it doesn't sound like you're really going overboard, and if you can at least enjoy your improvements for the next 5 to 10 years, then I think it'd be worth it. Your house is both your home and an investment, and where the line between the two lies is often blurred.
December 8th, 2009 at 10:38 pm 1260311904
December 8th, 2009 at 11:53 pm 1260316394
December 9th, 2009 at 05:42 am 1260337351