"Should you stay or should you go now?" Like many of life's biggest decisions, they can often be wrapped up in a song. But honestly, how should you decide? It's a big decision. Should you renovate, or just move? You have a highly personal decision to make. But before you decide, do your homework.
Today you have options. These are your choices:
Do nothing (but please, don't make this decision by default)
Renovate your existing home
Buy a move-in ready property
Buy a home in need of renovation
Not sure how two decide? Ask yourself questions. A lot of questions.
You can start with these three:
How much time do you have?
Even if you don't plan to DIY, managing a renovation project and the disruption at home takes up a lot of time and energy. The displacement can be stressful and can cause a lot of disruption to you, your family and relationships. Before you dive into this understand you should need to frequently visit your job site and communicate with contractors, even if you hire a General Contractor (GC). How frequently? Daily if possible.
Does the math work?
Build a top down and bottom's up rough project estimate. For example, is your $100,000 renovation budget all-in? Don't forget to plan for G&A and profit and tax (General & Administrative expenses).
Compare the cost of renovating and to what similar, already updated homes are selling for in your area.
Does it make sense to invest in your neighborhood?
Can you afford an already "done" house in your preferred location?
What are renovated homes selling for in your area today?
If this project costs a lot more than you anticipate, would it still be worth it?
What's your motivation for renovating?
Who are you doing this for and do you plan to sell your home in the future? Maybe you just need more space, a more functional layout or wish to make your home to your tastes. Others are motivated by increased resale value.
A lot of homeowners think that making improvements will automatically make their home worth a lot more, but the math isn't that linear. Get clear on that before you invest in improvements and design that may not align with your long term housing and financial goals.
Putting thousands into your kitchen doesn't make your home automatically worth that much more. According to Remodeling's Cost vs Value report, homeowners can only expect to recoup between 50% and 70% of kitchen remodeling cost depending on the project scale. Yikes! If you plan to stick around for 10 to 20 years and will get a lot of personal enjoyment out of it, go for it! At the same time, someone buying a home with a 10 to 20 year old kitchen is probably thinking it needs renovating again.
Before you sign contracts to renovate your home ask yourself: should you renovate or move? Both are big undertakings. By evaluating your available time, checking if the math works, and reflecting on your motivation for remodeling you can make the best decision for you, your home and your household.
Hey neighbor, would you like a handy workbook to help you through more details of this decision? I made a "Renovate or Move guide complete with a high-level budgeting example.