When dissatisfaction with your current home strikes, it can be exciting to launch into a plan for a new addition. A new living room, bedroom, or more can add value to your home while improving your quality of life.
On the other hand, even a modest addition can turn into a major construction project, with architects and contractors to manage, construction workers traipsing through your home, hammers pounding, and sawdust everywhere. And although new additions can be a very good investment, the cost-per-square-foot is typically more than building a new home, and much more than buying a larger existing home.
Define your needs
To determine if an addition makes sense for your situation, start by defining exactly what it is you want and need. By focusing on core needs, you won’t get carried away with a wish list that can push the project out of reach financially.
If it’s a matter of needing more space, be specific. For example, instead of just jotting down “more kitchen space,” figure out just how much more space is going to make the difference, e.g., “150 square feet of floor space and six additional feet of counter space.”
If the addition will be for aging parents, consult with their doctors or an age-in-place expert to define exactly what they’ll require for living conditions, both now and over the next five to ten years.
Types of additions
“Bumping out” one or more walls to make a first-floor room slightly larger is something most homeowners think about at one time or another. However, when you consider the work required, and the limited amount of space created, it often figures to be one of your most expensive approaches.
Adding a whole new room (or rooms) to the first floor of your home is one of the most common ways to add a family room, apartment or sunroom. But this approach can also take away yard space.
For homes with steep rooflines, adding an upper floor dormer may be all that’s needed to transform an awkward space with limited headroom. The cost is affordable and, when done well, a dormer can also improve the curb appeal of your house.
For homes without an upper floor, adding a second story can double the size of the house without reducing surrounding yard space.
Building above the garage is ideal for a space that requires more privacy, such as a rentable apartment, a teen’s bedroom, guest bedroom, guest quarters, or a family bonus room.
You’ll need a building permit to construct an addition, which will require professional blueprints. Your local building department will not only want to make sure that the addition adheres to the latest building codes, but also ensure it isn’t too tall for the neighborhood or positioned too close to the property line. Some building departments will also want to ask your neighbors for their input before giving you the go-ahead.
Requirements for a legal apartment
While the idea of having a renter that provides an additional stream of revenue may be enticing, the realities of building and renting a legal add-on apartment can be sobering. Among the things you’ll need to consider:
Some communities have regulations against “mother-in-law” units so they have zone-approval requirements.
In many cities, you can’t charge a tenant for heat, electricity, and water unless utilities are separated from the rest of the house (and separately controlled by the tenant).
When building an “accessory dwelling unit” (the formal name for a second dwelling located on a property where a primary residence already exists), building codes often contain special requirements regarding emergency exits, windows, ceiling height, off-street parking spaces, the location of main entrances, the number of bedrooms, and more.
In addition, renters have special rights while landlords have added responsibilities. You’ll need to learn those rights and responsibilities and be prepared to adhere to them.
The cost to construct an addition depends on a wide variety of factors, such as the quality of materials used, the laborers doing the work, the type of addition and its size, the age of your house and its current condition. For ballpark purposes, however, you can figure on spending about $200 per square foot if your home is in a more expensive real estate area or about $100 per foot in a lower-priced market.
You might be wondering how much of that money your efforts might return if you were to sell the home a couple of years later? The answer to that question depends on a number of variables, but the average “recoup” rate for a family room addition is typically more than 80 percent.
The bottom line
While you should certainly research the existing-home marketplace before hiring an architect to map out the plans, building an addition onto your current home can be a great way to expand your living quarters, customize your home, and remain in the same neighborhood.
Choosing less space often has to do with a desire to live a life that’s simpler. Whether you’re retiring, want an eco-friendly, low-maintenance lifestyle or your children have moved away, downsizing might be the best option for you. Here are the advantages and disadvantages to consider before making the move and questions to begin asking yourself now.
- Increased cash flow.
- Spend less on your mortgage payment and you are likely to have more money leftover for other needs or desires.
- More time.
- Cut down on time spent on household chores such as cleaning and vacuuming which will leave you with more hours in the day to do something more enjoyable.
- Lower utility bills.
- Costs less to heat and air condition a small home.
- Less square footage decreases the amount of energy expended.
- Reducing energy is better for the environment and it helps keep your home green.
- Reduced consumption.
- You would likely buy less since you won’t necessarily have the room for it.
- Minimized stress.
- Homeowners who have successfully downsized often feel happier because they are no longer overwhelmed by the demands of a larger home.
- Less responsibility, less housework to do, increased cash flow and flexibility equals reduced stress.
- Fewer belongings.
- Moving into a smaller space would mean you would need to give away or donate furniture, books, kitchen supplies, etc.
- No room for guests.
- Hosting holiday dinners might be out of the question for a smaller home.
- Space restrictions.
- Less space means you could feel cramped.
- Lifestyle changes.
- For long-term homeowners, downsizing means changing a lifestyle.
What to consider before downsizing
These questions are important to ask yourself because for some people, downsizing may not be the best option for them.
- Does size matter to me?
- Think about how much your identity is wrapped in your house.
- Is it important for you to have a guest room or a second bathroom?
- Will I miss some important things about a more spacious home?
- Will moving into a smaller home feel like a step backward?
- How will other life events affect my living in a smaller home?
- Consider possible scenarios you may not expect such as adult children moving back home or if you plan to add a child.
The Cost to You
- How much will it cost to replace the furniture?
- When you move into a smaller home this means you might have to downsize your furniture to make room.
- How much will it cost to get rid of the stuff I don’t need or won’t fit?
- It’s important to have a plan for how you’re going to sell or give away the things you don’t need.
- Consider things like family heirlooms. What are you going to do with all your antiques or treasures that your smaller home may not be able to accommodate?
- How much will I get when I sell my current home, and will it help cover the cost of buying my new home?
If you know downsizing is the right option for you, you’re probably asking yourself, “Should I sell first and then buy or buy first and then sell?”. When you’re ready to discuss your options, talk to an experienced Real Estate Agent.
Condominium homes are a great, low-maintenance choice for a primary residence, second home, or investment property. This alternative to the traditional single-family home has unique issues to consider before buying, as well as unique benefits. Here’s some background information to help you decide whether purchasing a condo is a good match for you.
The popularity of condominiums with baby boomers and young professionals continues to surge. Condo sales are up 23 percent from 2013 with a medium price of $209,600 according to the National Association of Realtors. Many buyers are realizing that condominium homes can be a great way to enjoy the benefits of home ownership combined with extensive amenities and a low-maintenance lifestyle.
Increasingly, condos are not just for first-time homebuyers looking for a less expensive entry into the housing market. Empty-nesters and retirees are happy to give up mowing the lawn and painting the house. Busy professionals can experience luxury living knowing their home is safe and well-maintained while they are away on business. If you are considering buying a condominium for a home, here are a few things you should know:
With condominiums, you own everything in your unit on your side of the walls. Individual owners hold title to the condominium unit only, not the land beneath the unit. All owners share title to the common areas: the grounds, lobby, halls, parking areas and other amenities. A homeowners’ association (HOA) usually manages the complex and collects a monthly fee from all condominium owners to pay for the operation and maintenance of the property. These fees may include such items as insurance, landscape, and grounds upkeep, pool maintenance, security, and administrative costs.
The owners of the units in a condominium are all automatic members of the condo association. The association is run by a volunteer Board of Directors, who manage the operations and upkeep of the property. A professional management company may also be involved in assisting the board in their decisions. The condo association also administers rules and regulations designed to ensure safety and maintain the value of your investment. Examples include whether or not pets are allowed and the hours of use for condominium facilities, such as pools and work-out rooms. Should a major expense occur, all owners are responsible for paying their fair share of the expense.
The pros and cons of condominium living:
The condominium lifestyle has many benefits, but condominium ownership isn’t for everyone. Part of it depends on your lifestyle. Condominium living may not be optimum for large families with active kids. The other factor is personal style. By necessity, condominium associations have a number of standardized rules. You need to decide whether these regulations work for you or not. Here are some points to keep in mind if you’re considering condominium living.
Cost: Condominium homes typically cost less than houses, so they’re a great choice for fist-time buyers. However, because condominiums are concentrated in more expensive locations, and sizes are generally smaller than a comparable single-family home, the price per square foot for a condominium is usually higher.
Convenience: People who love living in condominiums always cite the convenience factor. It’s nice to have someone else take care of landscaping, upkeep, and security. Condominium homes are often located in urban areas where restaurants, groceries, and entertainment are just a short walk away.
Luxury amenities: May condominiums offer an array of amenities that the majority of homeowners couldn’t afford on their own, such as fitness centers, clubhouses, wine cellars, roof-top decks, and swimming pools. Lobbies of upscale condominiums can rival those of four-star hotels, making a great impression on residents.
Privacy: Since you share common walls and floors with other condominium owners, there is less privacy than what you’d expect in a single-family home. While condominiums are built with noise abatement features, you may still occasionally hear the sound of your neighbors.
Space: With the exception of very high-end units, condominiums are generally smaller than single-family homes. That means less storage space and often, smaller rooms. The patios and balconies of individual units are usually much smaller as well.
Autonomy: As a condominium owner, you are required to follow the laws of the associations. That means giving up a certain about of control and getting involved in the group decision-making process. Laws vary greatly from property to property, and some people may find certain rules too restrictive. If you long to paint your front door red or decorate your deck with tiki lanterns, condominium living might not be for you.
Things to consider when you decide to buy:
Condominium homes vary from intimate studios to eclectic lofts and luxury penthouses. The right condominium is the one that best fits your lifestyle. Here are a few questions to ask to determine which condominium is right for you.
How will you use it?
Will your condominium be your primary residence? A second home? An investment property? While a studio may be too small for a primary residence, it might be a perfect beachfront getaway. Also consider how your lifestyle may change over the next five to seven years. If you are close to retirement, you may want to have the option of turning a vacation condominium into your permanent home.
Where would you like to live?
Some people love the excitement and sophistication of urban living. Others dream of skiing every weekend. Whether it’s the sound of the surf or the lure of the golf course, a condominium home affords you the ability to live a carefree lifestyle in virtually any setting.
What amenities are most important to you?
The variety of condominium amenities increases each year. Decide what you want, and you can be assured of finding it. Most urban and resort condominiums have an enticing array of extras, from spas to movie screening rooms to tennis courts.
What are your specific needs?
Do you have a pet? Some associations don’t allow them; others have limitations on their size. Parking can be a major issue, especially in dense, urban areas. How many spaces do you get per unit? Do you pay extra if you have more vehicles?
Finally, once you’ve found a property you like, examine the association’s declaration, rules, and bylaws to make sure they fit your needs. The association will provide you with an outline of their monthly fees and exactly what they cover so you can accurately budget your expenses.
Review the association board’s meeting minutes from the past year to get an idea of any issues the association is working on. An analysis of sales demand and property appreciation compared to like units may help ensure that you make the best possible investment.
However, homes that are priced right and in great condition are selling, and in many cases, selling quickly.
As buyers feel the market cool a bit, it may cause them to want to wait. They sometimes feel like it’s a better choice to ‘wait and see what happens.’
The reality is, there is a real cost to waiting given two specific facts.
1. Interest rates will continue to rise
2. Prices will continue to rise
Interest rates are a little more than 0.5% higher than a year ago and experts predict them to be another 0.5% higher by this time next year.
Prices have been appreciating at roughly 10% per year for the last four years. Based on the numbers, we see that appreciation could be 5% per year for the next two years.
So, let’s look at a house priced at $450,000 today. If prices go up “only” 5% for the next 12 months, that home will cost $22,500 more in a year.
And, if rates go up another half percent, the monthly payment will be $206 higher. That’s an 11% increase!
In an environment of rising prices and rising rates, there is a real cost to “wait and see.”