At sometime in your homeownership you are likely to face the challenges of deciding if you should build a new home or remodel your existing property. Tackling this problem is a difficult and complex dilemma to evaluate. It can be an emotionally charged and a complicated process just sorting through the many issues, let alone attempting to finalize it. Our discussion will be a summary outlining many of the factors and the relevant merits and drawbacks that characterize this decision.
Major Home Remodeling
Major home remodeling is described as a home remodeling project that includes extensive structural changes, or whole home remodeling back to the studs, or substantially increasing the size of the homes envelope through a home addition. It is generally the cost of a major home remodeling project that causes an owner to consider other alternatives.
The expense of a major home remodeling project can be considerable. It is an investment in your lifestyle and one of your most important personal assets. The cost of a major home remodeling project can require the assistance of temporary financing sources and the restructuring of your mortgage at the conclusion of construction. Developing a feasibility budget is the most effective place to start in preparing a project funding plan.
By preparing a home remodeling feasibility budget you can compare the financial attributes of a new custom home building project to the major home remodeling project you are considering. As with most emotionally based decisions, the financial feasibility is not the only story. Lets discuss some of the important pros and cons of a major home remodeling project.
Pros
- Staying in Existing Area Location – It is not always easy leaving the friendly area of one’s neighborhood. We get very comfortable with the our daily habits and routines. Changing locations can lead to huge adjustments for our family to relocate out of school districts and the neighborhoods we have become comfortable with.
- Increasing Property Values – If properly designed and planned a major home remodeling project can increase our property values significantly. It is a very important step when evaluating the financial feasibility of the project. Close analysis of your after improvement market value on the – resale value, when compared to comparable neighborhood properties, will help project your ROI.
- Financing Easier to Obtain – As previously mentioned, financing can be a large part of a major home remodeling project. It is much easier obtaining remodeling financing then new home construction financing. In addition the financing options are greater for such methods as home equity or second mortgages.
- Reducing Maintenance & Repair Expenses – One of the major benefits of a home remodeling project is that it provides an opportunity to replace aging home products and inefficient and outdated energy consuming products. This includes things like windows, doors and air conditioners.
Cons
- Construction Lifestyle Interrupting – When undertaking a major home remodeling project you should expect that it will interfere with your life for a period of time. Although there are some exceptions, most major home remodeling projects that are not completed in a phased construction method, require the family to temporarily relocate. Many of the owners possessions are normally placed in storage and the family is in tighter quarters then it is used to.
- Architectural Design Limitations – Although are many design changes that can be incorporated into your existing home, there are both financial and structural limitations on what you can actual accomplish during remodeling. The reality is that if you are focused on changing a classic colonial traditional home into an modernistic geometric contemporary home, you would likely be better off building a new home.
- Financial Surprises – When undertaking a major home remodeling project you are highly likely to discover unexpected surprises that no one could have anticipated. Most of these surprises will result in additional expenses to the budget.
- Temporary Housing – Temporary housing has a host of problems it presents for most families. Most of these begin with the additional expense associated with temporary housing. The existing home expenses like property taxes and your mortgage continue despite not enjoying your home during construction.
Building a New Custom Home
Building a new custom home is a dream that does not come true for most people. This is due to the amount of risk, expense and complications associated with the design and the construction process. For those that are willing to prepare themselves and obtain a trusted adviser to lead them through the process, building a new custom home can be extremely exciting and fulfilling experience. There is nothing like the pride of ownership of a one of a kind home the marks a lifelong quest to make your personal statement.
Your decision to build a new custom home when comparing it to a major home remodeling project is not made lightly. In most cases the total cost associated with building a new custom home is likely to be much greater than a major remodeling project to an existing home. Secondly with the basic processes being common, the distinctive difference is the extended length of time associated with building a new custom home.
If properly prepared for this journey and aided by a trusting and capable design build team, the end result will increase your personal wealth and bring great rewards in the form of personal and family fulfillment.
Pros
- Full Design Control – The most impactful benefit in building a new custom home is the ability to have a one of a kind home designed uniquely for your lifestyle and families needs. The only limitations normally imposed is your budget.
- Lower Maintenance Cost – One of the great benefits of a new custom home is that there is very little home maintenance expense for a foreseeable future. For larger homes this can result in a considerable savings.
- Lower Energy Cost – New built custom homes are far more energy efficient, as the national building and energy codes require. A distinctive advantage that building a new custom home has over a major home remodeling project is that the owner can incorporate structural design features into the home to reduce energy consumption. Some of these features are designing shading features into the structure and altering the orientation of the homes full sun exposure.
- Greater Home Market Value – Building a new custom home will indeed cost you more but will add greater value to your personal holdings in the form of asset value. Even well developed remodeled homes do not have the market value (dollars per sq ft) as a new custom home.
- Warranty – The chief difference in a warranty of a new custom home and a major remodeled home is that everything in a new custom home is under warranty. Whereas the case of a newly remodeled home, only those areas that were modified are warranted.
Cons
- Lot Location – Locating the ideal new home building can be very challenging and time consuming if you prefer a location in a specific neighborhood. This is especially true for mature well established areas in metro Houston.
- Time – The design and construction of a new custom home can take 12 to 24 months. That does not include the time preparing and educating yourself for this journey. It is because of the length of time that you want the best design build team around you during this event.
- Major Capital Investment – This factor is only a disadvantage if you are undercapitalized for such a project. In addition to a substantial capital investment it is well advised that you prepare some contingency into your budget for privileged cost overruns on such things as allowance cost overruns.
- Temporary Housing – Much like a major Home Remodeling project you will need to maintain your current living arrangements or find temporary housing during the design and construction period.
Making the final decision to build a new custom home or remodel your current home has many factors to evaluate. For some owners it is a fairly easy decision based on a long term strategy already in place. But for the vast majority of owners faced with this dilemma, this decision making process requires a great deal of research and analysis.
