Should we spend 500k on a renovation?

[Anonymous]

$500K is insane. It might very well be what reno costs right now, but it seems like a stupid financial investment. If you love the location, tear down and rebuild. Otherwise, move to a house that is better suited to your needs.

[Anonymous]

I think $500K is a reasonable investment considering your location and comparable homes but would it be the house you’d choose if you were looking today. New builds today have 9’ ceilings, have upgraded insulation and HVAC systems. The layouts wouldn’t be making best use of your existing home but maximizing livability. Would you choose the somewhat busy street you’re on now? Is the yard what you hope?

We put about that much in our renovation but we have a great neighborhood that we couldn’t have afforded to buy into without the sunk costs. The existing home had 8.5+ ceilings (so not terrible) BUT we did spend extra to work around existing footprint and the work took longer than a new home would have (and if we’d just bought an existing house we would not have had to move out for 6 weeks of the long process.)

[Anonymous]

Kitchen is usually worth about 10% of the house, but it sounds like you are doing a model expansion. Maybe remodel the kitchen but put in bigger windows and slide out door leading to a deck? I am a big believer that layout is more important than size.

[Anonymous]

OP here. Great advice from most people here. The issue is livability of the kitchen. I think we will need to work within the existing footprint and perhaps hire an interior designer and DIY on paint etc.

Re colleges we had to pay off student loans and had a nanny at the same time, so we will no longer have the nanny in a year or two, and we've completed paying off student loans. Family savings is just that, non retirement family savings in stocks bonds cash etc.

[Anonymous]

No. Hang on to the money. Even in normal circumstances your savings for your requirements is not great. With the pandemic and other kinds of instabilities, you should hang on to the money.

[Anonymous]

Ship lap and barn doors don't cost that much.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:You need to consider your current house value, what it would be post Reno, whether you could find a similar house for less if you moved, and how long you will be in the house. Your savings are low for this Reno budget, so you better have really good answers to those questions.

Who would use savings for this kind of reno? Just get a heloc.

No. Just get a new house. Jesus.

You'd have to move to do that.

[Anonymous]

Anonymous wrote:Why would you put in $500k to have your basis almost $1.4 for it to be worth $1.1-$1.2? That’s ridiculous. Just move.

+1
Really ridiculous. You will put in 500k to lose 200k when you sell?
Also, you are not really making enough money for Bethesda to undertake that expensive renovation.

Only sensible thing is to move to a cheaper neighborhood or make peace with the house you have.

[Anonymous]

You can greatly reduce the estimate by reducing the scope of work. We hired a kitchen designer to do our layout, and were able to double the usable space in our kitchen without moving or removing any walls. With fully custom everything, it came in at almost exactly $85k including all fixtures, appliances, and furniture.

[Anonymous]

Anonymous wrote:You can greatly reduce the estimate by reducing the scope of work. We hired a kitchen designer to do our layout, and were able to double the usable space in our kitchen without moving or removing any walls. With fully custom everything, it came in at almost exactly $85k including all fixtures, appliances, and furniture.

We did the same. Changing the layout of the space was far better than the little extra square footage we could have gotten for double the price with a modest addition.

[Anonymous]

Anonymous wrote:You can greatly reduce the estimate by reducing the scope of work. We hired a kitchen designer to do our layout, and were able to double the usable space in our kitchen without moving or removing any walls. With fully custom everything, it came in at almost exactly $85k including all fixtures, appliances, and furniture.

PP here ... Should have said, we also gut-renovated our basement a couple years ago for $130k. Before each one, we had our agent come out to run comps and advise on what our house and our neighborhood could support when we sell in the future.

We live in a more historic neighborhood, where there is a premium for meticulously updated and maintained historic homes. Our 1920 house has some historic value and maintains its beautiful original details. With that, it was worth it for us to invest in our existing space, rather than just buying something new. I would probably make a very different calculation if I was in an 80s colonial.

[Anonymous]

These are always interesting threads to read.

I'm in Mclean in a house that would sell for $1.5mm now, and i'm considering a major renovation as well to enlarge bedrooms and living areas and improve our outdoor space. The challenge with moving is that there is nothing 'better' than my current $1.5mm house, in the same area/schools, for less than $2.5mm+. Short of spending substantially more to buy or moving to a new school, renovation seems like the best option and i have to imaging that is what is driving up contractor fees. If we had dozens of $1.8mm-$2mm houses on the market moving might work. Probably similar situation in Bethesda.

[Anonymous]

Anonymous wrote:$500K is insane. It might very well be what reno costs right now, but it seems like a stupid financial investment. If you love the location, tear down and rebuild. Otherwise, move to a house that is better suited to your needs.

You’re not going to tear down and rebuild a 3400+ sq ft house in Bethesda for 500k. Buying and selling in MD is expensive too. On a $950k house, you can expect to pay a good $60k on the sale for commissions and transfer taxes, and then another transfer tax for the new house. That’s a kitchen reno right there.

[Anonymous]

Anonymous wrote:

Anonymous wrote:$500K is insane. It might very well be what reno costs right now, but it seems like a stupid financial investment. If you love the location, tear down and rebuild. Otherwise, move to a house that is better suited to your needs.

You’re not going to tear down and rebuild a 3400+ sq ft house in Bethesda for 500k. Buying and selling in MD is expensive too. On a $950k house, you can expect to pay a good $60k on the sale for commissions and transfer taxes, and then another transfer tax for the new house. That’s a kitchen reno right there.

OP should reduce their plans for the house reno to a more reasonable amount.

[Anonymous]

That's a really high price. We are about to begin a 500K renovation. We will double the size of our house above ground. We will go from 3 to 5 bathrooms (4 brand new/redone). We will have a new kitchen. Go from 2-4 bedrooms upstairs. This seems very high for what you are doing. We are close in, inside the beltway too.

There is extremely low inventory in our neighborhood, we love our neighbors, and want to stay in our location. We've bid on multiple nearby houses and were outbid every time. We just got our appraisal back and judging by it, will come out well over $100K ahead based on today's prices after spending the $500K. So we are moving forward.

However, we are in a much better financial situation than you with our net worth, college savings, and HHI.