Owner Building Step 3: New home or renovation? How this decision changes the rules of the game.
This is step 3 in a 10 step process uncovering whether Owner Building is right for you.
Previously we looked at the challenges owner builders run into when looking to finance new construction. Opting for renovating your current home can all but eliminate this obstacle as banks are more apt to lend large sums of money with equity to back up the loan.
But ease of financing is only one aspect that you, as an owner builder, must consider when making the big decision to either gut and/or extend what you’ve already got, or to paint your dream home on a blank canvas!
Draw a line in the sand between legitimate goals and fanciful dreams.
We’d all love to live in a ridiculous mansion with ten bedrooms, baths to match, and a private bowling alley in the basement (replace bowling alley with your own personal non-essential fantasy), but if you’ve got that kind of dough you wouldn’t be reading this owner builder how-to series to begin with. So, take a deep breath, come back down to Earth, and think about what’s truly lacking in your current home that you hope to have by the end of your project.
Outline the specific goals you hope to achieve and honestly assess whether it’s feasible to meet your goals through modifications of your current home. In many cases all it takes is a little creativity and out-of-the-box thinking to come up with a renovation solution. In other cases, like when you wish to change location, renovation simply isn’t an option.
A useful measuring stick is to look at the 70/30 rule. If at least 70% of the existing structure will remain exactly as is, then you ought to consider renovating, but if more than 30% requires updating, the costs may outweigh the benefits. Age and quality of build of your home are also factors that come into play. It’s foolish to throw a $50,000 kitchen into an aging property with shaky bones!
How do your insides look?
Look at how required renovations will affect your electrical, ventilation, and plumbing. Completely gutting and replacing infrastructure systems is extremely expensive and time consuming. Verify that the inner-workings of your home are in good shape and up to code before ripping into demolition work.
Sometimes starting renovations could obligate you to do more work than you originally intended. For example, you could be legally required to upgrade your entire electrical system if you begin renovation on a house with wiring that is not up to scratch.
The future’s just around the corner.
Depending on whether it’s a keeper or it’s going on the market, think about how your renovation will support your existing family or affect the future sale price of your home. Analyse your potential return on investment, but also consider how the alterations will affect sellability down the line.
Will your extension look out of place or as if it were part of the original construction and how does this fall in line with your council’s building regulations? Will your renovations create a living space radically different from that seen by the “average” home buyer in your area? Do you risk over investing for your neighbourhood?
These are all questions that you’ll want to ask yourself.
Next up we’ll talk about design and how you go from daydream visions to blueprints!