Renovate or relocate? – Solving the dilemma
At some point most of us will have to make a critical decision - should I stay or should I go?
In other words: is it time to renovate or bite the bullet and upgrade to a bigger, better home.
Both have benefits. There is the opportunity to add significant value to a home by adding a room or
modernising the kitchen and bathroom, while buying a new house instead means you avoid the disruption that major building work can inflict on daily routines.
Both have pitfalls. There is the risk of over-capitalising on a renovation, or distancing yourself from a community you’ve grown to love if you move elsewhere.
As with most big decisions, the key is to do your research and get advice from the experts, which in this case means architects, builders and real estate agents.
Let's examine both options:
Renovation pros and cons
The big advantage of sprucing up your existing home is that it allows you to construct specifically what you want to your own budget.
If you need another bedroom or a home office or a living extension you can design it according to the land size, your needs and the aspect.
Renovation can add hundreds of thousands of dollars to your home if you manage the costs well. However, over-capitalisation is also a big risk.
You should find out what the true renovation cost will be by speaking to an architect or builder for advice.
Some houses are just not worth doing up beyond giving them a lick of paint and some new carpet. There's no point putting on a shiny new annex if the rest of the house is falling apart.
The reality is that you can spend a lot of money on doing up a building and have little chance of recouping your expenditure when you sell it.
Speak to the local real-estate agents about what you would get for your place now versus renovated. You might make more money by selling now because un-renovated properties are more in demand.
If you love where you live and don't want to leave the area, think about whether it is sensible to spend large sums on your existing home. A smarter option might be to look for a better house in the same area.
Often, you will have to pay a higher interest rate for a construction loan than you would for a standard mortgage, so that also tilts the balance towards moving.
You also need to factor in the disruption that a major renovation can cause, which may involve having to move out while work is in progress.
Find out how long a renovation would take and, if you have to move out, how much would it cost you if you have to rent?
It is also worth asking if you can you renovate in stages to stagger the cost. If you do it in sections, this can sometimes eliminate the need to move out altogether.
Another way to save money, if you have some basic knowledge, is to do some of the work yourself.
But regardless of your approach to building, there is a renovation risk if you add something that reflects your individual taste but deters potential buyers. This is one area where it would be prudent to let substance rather than style guide design if the aim is to eventually sell-up.
Go to open inspections in your area and take a look at what other people with similar houses have done. This will help you understand the quality of renovation you need to do.
Having said all that, renovating allows you to create your perfect nest, to turn your vision into reality. Living in a home that truly reflects your style and taste is hugely satisfying.
And then there are the savings. If you renovate you won't have to pay expensive moving costs including stamp duty, new insurance and new mortgage costs.
You also get to keep your nice neighbours.
Upgrading to a new place
Moving and upgrading has a lot to offer. For a start you might be ready, and financially able, to move to the sort of area you've always aspired to, such as near a beach or onto acreage.
Perhaps you want to be closer to friends or grandchildren, a better climate or health services. You can also go the other way and downsize to free up cash to live on or travel.
That's the thing ... moving is all about choice.
By the time you are ready to consider shifting you're likely to have a clear understanding of what your ideal home looks like and where you want it to be.
Relocating can be expensive with selling, buying and moving costs but if you choose a new place for the right reasons it will be money well spent.
However, there are downsides to upgrading, even if it is to your dream home.
The disruption can be significant – kids often have to change schools and move away from their friends. Plenty of adults are also challenged when they are separated from their social groups and familiar activities.
You could of course both relocate and renovate by following the old adage about buying the worst house in the best street.
And the other option is to buy somewhere for the land, knock down the existing dwelling and start from scratch.