If you are facing the dilemma that was previously described you should at a minimum consider the following aspects:
Look at the homes on your street and in your neighborhood. Are they all a similar size to your current home? If they are, you may not obtain a return on your investment by adding an addition, if that home improvement makes your house the largest and most expensive one in the neighborhood. If however, you currently have a home that is smaller than the average, in your neighborhood, it may be highly advantageous, from an investment standpoint to add an addition.
Does your lot allow space for an addition beside or behind your home or would it mean adding a second floor? Would an addition to your home eliminate your outdoor (backyard) space? Would the finished home be architecturally pleasing or a neighborhood eye sore? If you can visualize the addition and wish to proceed on, it would be wise to call in a professional architect to provide expertise on what potentially can and cannot be done. An architect will also be able to advise what is feasible based on the current building codes for your municipality.
With the new home 3D architectural software packages you can add an addition or a second story to your home and see what it will look like before you invest. These 3D architectural software packages are inexpensive and a good investment if you are planning any remodel.
Additional information on 3D architectural software packages
The architect should be able to advise you on a rough home improvement budget based on your requirements and location. Construction costs vary from municipality to municipality, however if you are adding open living space, not including kitchens or bathrooms a good minimum number is $150 a square foot. Kitchens and bathrooms can easily double that number. Of course, adding upscale products such as oak trim and marble flooring will also increase the costs. You will not be able to obtain firm quotations from contractors until you have a detailed set of plans. Always add an additional 15 to 20 percent to any rough estimates as major home improvements generally exceed their initial budget.
A major home improvement does allow you to invest some sweat equity into your home. Portions of the home improvement, depending on an individual’s capabilities, can be done by the homeowner. Painting, wallpaper, hanging light fixtures, widow coverings, gardening, landscape and alike are items that the homeowner can easily do. If you decide to move it is highly likely that you will end up doing a lot of those items at your new home.
A major home improvement, especially if it involves bathrooms and kitchens can be a major inconvenience to you and your family at least for a period of time. Workman traipsing through your home, noise, dust, dirt, and loss of utilities for periods of time are all part of the experience of a major home improvement.
Always remember that moving is also filled with inconveniences including packing, new schools, utilities, insurance and that is not to mention the loss of your children’s friends and your neighbors.
Although many people recommend that you discuss a potential home improvement with a real estate agent as to the investment versus buying another home, in my opinion this is a mistake. Real estate agents only make money when people buy and sell homes, they obtain no benefit, in any manner, if you invest in a major home improvement. From personal experience, they will always suggest that buying another home is the better investment – it definitely is - from their standpoint!