Should I stay or should I go now? Deciding whether to renovate or move
Owning a home is a big part of the American dream, but what happens when you wake up in a house that doesn't quite fit your needs? Deciding whether to remodel your current home or move to a new one can be tough, but the Scott Brothers—Drew and Jonathan—have some tips to help you decide which path is the best one for you.
Think about location
When you're deciding whether to renovate or move, Jonathan Scott suggests that you start by considering whether your current home makes your life easier or more difficult. Start by thinking about the places that you regularly visit—like work, your church, or your friends and family—and ask if your commute is challenging from your current location.
If your current location doesn't serve your needs, then that should impact your decision to move. However, if it's a good location for you, the next step is to think about your actual house, and determine whether it is feasible to adapt it to your needs. "If making the home function better by additions and renovating costs more money than the home's actually worth, it's a bad financial decision," says Jonathan.
Factor in your emotions
Drew Scott says that, often, the emotional connection that homeowners have to their home means that no new home can compare. "You may have memories of raising your kids there or inheriting the place from your parents," he says. "These are feelings you won't have in a new home."
One time, Drew recalls, he and Jonathan were working with a family who had been in their home for four generations. The current owner's grandfather had built and designed the home, and their elderly mother had planted a tree in the front yard when she was ten years old. Now, it was a big, majestic oak that dominated the garden.
"They will never have those feelings in a new home—it felt too important to keep those memories," Drew says. "You can't buy that memory of your mum, 60 years ago, planting a tree like this. That detail encapsulates this being a fourth generation home."
Build a budget...but factor in add-ons
If you decide to renovate, keep an eye on the cost of add-ons. When renovating for clients, Jonathan finds that his and Drew's numbers remain accurate, but the homeowner's add-ons often get out of control. "Everyone does it—you get pulled into the excitement of seeing your dream home come together," he says. "When Drew was renovating his property in Los Angeles, he was the worst I've ever had for add-ons. He added a basement!"
To keep on track, Jonathan suggests laying out your budget, then factoring in your current and future earning situation. If you plan to have a child, keep in mind that your life will get more expensive and you'll need a buffer and safe range for your budget. Most of all, he says, keep in mind that you don't have to do everything at once. “Do the renovations you can enjoy now—then, save some other ideas and plans for when you have more money," he says.
Preempt your growth needs
As you ponder whether to move or renovate, think about your future growth needs. Recent census data shows us the top reason Americans move is to relocate to a new or better house. Jonathan notes that each move generates legal, real estate, and moving fees, which can cut into your ROI. "If you suspect you may expand your family or need a home office, find a home offering the square footage you can grow into with a renovation," he says. "Because then you're investing in one property instead of constantly moving and changing houses."
Drew adds that, if you decide to move to a different home, think about buying an older house. "Usually you're going to pay the same for a new house that's smaller on a smaller lot, as opposed to getting an older house that's on a bigger lot," he says.
Work with experts
As you're evaluating your finances, Drew suggests reaching out to professionals for advice and perspective. If your house needs work, find contractors to quote you costs for renovations. And if you're thinking about a new place, reach out to a real estate agent to compare the value of buying a new house, versus renovating your current one. "We're all here as professionals to help make this the easiest possible process," he says.
If you plan on refinancing to pay for your renovations, Jonathan says, talk to a bank you trust and, ideally, already have a relationship with. "You want someone to understand your family situation and which products best serve you whether it's a home equity line of credit, a traditional mortgage or another product," he says.
Whether you're moving or remodeling, reaching out to professionals can help ease the process--and insure that you're happy with the end result. "For anyone seeking to move from their first home, renovate their only home, or, expand their investment with a second property, it can feel very scary because they don't do this daily," Jonathan says. The key, he notes is finding a bank that treats you like family. "That's the kind of relationship you need to build if you want to succeed as a home owner."
D G McCullough is a Wisconsin-based reporter, focused on social and business trends. Her work has appeared in the Guardian, the Economist, and the Financial Times.