Should I build or remodel?
Make no mistake - home renovation is hard work. By the time you are up to your elbows in debris you might stop and wonder what made you begin in the first place. The answer of course, is the reward. Remodeling a home is one of the best ways to buy low and sell high when it comes to real estate. However, there is a lot you should know before taking the big plunge.The first decision is to know whether or not remodeling a home is less expensive than buying or building a new home. There are benefits to both options so be sure to thoroughly evaluate your options before making your final choice. Here’s what you should examine:
The Land. In most cases the decision to remodel a home can result in significant savings associated with the cost of buying and developing the land. However, in addition to purchasing the land itself, many areas have impact fees, the cost of installing utilities, ground preparation fees and other costs required to even begin to break ground and build.
Building Code. Before you get excited about saving tens of thousands on the purchase price and preparation of raw land, remember a great deal of savings will eventually go toward the cost of updating and remodeling the house itself. Depending upon the condition of the house, age, building codes and other factors, it can actually be more costly to remodel than to build new.
Remember, it takes more time to demolish, haul away debris and then begin building than it does to just build from the beginning. Next, expect to encounter building codes or violations that must now be brought up to date. If a home is built before 1978 then you may encounter lead paint or pipes, older homes may even contain asbestos. Additionally, it is quite common to encounter new building codes required to bring the new work up to date; common examples include wiring and plumbing.
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What are the hidden costs of home remodeling?
Remodeling a home can be a wise financial investment but only if your projections are correct. Unfortunately, many homeowners underestimate the cost of remodeling their home. Use this checklist to spot many of the hidden costs of home remodeling.
Upgrades. It begins innocently enough; why not spend just a little more to get this extra nice item? It seems harmless enough until you repeat the process dozens of times. Soon you are hopelessly over budget. Shop in advance of establishing your budget and then stick to it.
Rising cost of materials or labor. Prices fluctuate more than you may imagine especially during a large project. Always build in a minimum of 10 percent for overages.
Taxes and insurance. This is a big one that few people take into consideration until after they are hit with the new tax or insurance bill. Remember, you are increasing the value of your home so your property taxes will increase as will your need for additional insurance.
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How do I build a house?
The opportunity to customize every aspect of the house for the way you live brings a sense of satisfaction and independence...but it can also bring major headaches if you don't understand what you are getting into. To make your building experience a dream come true rather than an ongoing nightmare, use this checklist on how to build a house.
1. Find the most experienced and professional real estate agent in your area. Before you object that you are building - not buying - a home, it is important to realize how critical finding and buying the right piece of land will be in the process.
2. Once you have located the right property then schedule an appointment with a loan officer to discuss financing options. When building a home you do not obtain a mortgage until the Certificate of Occupancy has been awarded. Instead, during the building process it is common to obtain a "construction loan" until the home is completed.
3. Shop for builders. Take time to visit model homes, speak to others who have build a home with this contractor and research any complaints or lawsuits. This is another area where a real estate professional can really pay off. Don't be afraid to compare quality, responsiveness and rates.
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Can I renovate a home?
Renovating a home is something that should be well researched before taking the plunge. The potential for reward is tremendous but so is the possibility of buying a never ending money pit. Use these quick tips on how to renovate a home to ensure a profitable endeavor.
- Speak to others who have undertaken similar projects. Listen to the wisdom and experience of others
- Start small. If you have never installed ceramic tile then don't tackle that two-thousand square foot job on your own. Instead, begin with a bathroom and if that goes well then try the kitchen.
- Keep it realistic. The most common error when renovating a home is not property allocating resources for time or budget. The rule of thumb is that it will always take more time and much more money than you expect.
- Find out about building codes and permits in advance. Failure to file proper permits can result in hefty fines - or worse - difficulty selling your home in the future. Make sure you understand requirements in advance.
- Have a back-up plan. Things go wrong. An injury takes place, an unexpected emergency cuts into your budget, all types of things can and will happen. Have a "worst case" plan of action that you can implement.
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Does it make sense to use environmentally friendly choices when remodeling?
If you have been contemplating the option of remodeling your home, now is a great time to go green. Not only does it help the environment and save on utility bills but it could also prove to be a very wise financial decision in the future. Currently, "green" or environmentally friendly products are considered a nice "extra" or "bonus" among home buyers but in the not so distant future, these features will become widely adopted. Legislation for greater energy efficiency is already in the work for appliances, central heating and air, and even light fixtures. Follow these quick tips when remodeling your home to make sure your investment looks as good today as it will tomorrow:
1. Spend a little more for energy efficient appliances, LED Lighting and water saving devices. In almost all instances, the savings obtained in the form of lower utility bills more than off-set the small additional price during purchase of the item.
2. As your state and local utility providers about tax incentives, rebates, grants and other forms of assistance. Although it varies from state to state and even between counties in the same state, there are many programs designed to off-set the cost of purchasing new energy efficient appliances when building or remodeling your home.
3. When calculating the return on your home renovation investment, be sure to consider future increases. For example, changing the water heater in your home might save several hundred dollars annually - a wonderful return on your investment! However, it's an even more impressive return when you realize that energy bills go up almost each and every year. Take the current rate of savings and then add to it for each year of ownership to derive the full potential return.
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What is a grandfather clause?
In many areas of the nation it is common to encounter a situation where the land itself is more valuable than the existing structure due to proximity and a desirable location. Finding this type of property can be a diamond in the rough if you know what to look for. A highly valuable piece of property with an undesirable house requires a bit more work but the reward can be well worth the additional effort if you have the time required to demolish and rebuild.
However, it is always advisable to make sure the property can actually be rebuilt should you go that route. Many older homes were built on smaller than average lots or parcels of land that would not receive approval today. They exist under a "grandfather clause" that allows existing structures to remain but should you try to re-build, it might be disallowed under new ordinances. The only remaining choices for this lot or parcel would be renovating or remodeling the home.
Before purchasing any piece of property with the intent to build a new home, be sure to verify the following:
- Zoning. Make sure the parcel can be used for the intent you are purchasing it for.
- Lot size. A difference of only a few feet can prevent you from rebuilding.
- Utilities. Don't assume you will retain the current utilities if rebuilding. It may be necessary to upgrade or connect to newer forms.
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