Adding on to the house

We live in a house that is old. Old by a lot of different standards but the biggest is by the amount of usable space. There are no closets. Storage is minimal but the real issue is that we feel like we are in an apartment with no real usable living space. The basement is large but is essentially a big mechanical room with a small entrance and is not good for more than storing small seasonal items. So Kellymofo and I have decided that adding an extension off the back of the house that consists of two rooms, one non heated storage room that is butts up to the garage o. The east wall and is 23x10 and another that is 23x35 that will be utilized as a living/great room. This is a very large area, I know, yet with 5 kids and 5 grandkids as well as siblings and friends it may not be big enough! The addition is in the south west  corner of the house and actually utilizes the area occupied by the dog run. The house sits on 1.4 acres, is nearly paid off and has a value in the middle $200s. The neighbors house was just purchased for $335k and they have completely remodeled it since buying it so I think investing another $80-90k to the house and raising the value would actually bring our house in line with the neighborhood instead of being the local value leader.

So what do I need to be on the lookout for with the current construction environment and the current home equity environment?

Below is a screen grab and scribble to give you an idea where I am talking about doing this.

I don't know what area of the country you live in.  Doing the math you would be adding about 1035 s.f. under roof.  In our area  of the country in 2022 (North Florida) it would cost you between $150 and $200 per square foot, unless you are doing all the labor yourself.  Material prices are at all time highs.

I am assuming you already know there are no septic systems or sewer lines in the area of the new addition.

Watching some appraisals in the past, additions like the one you are thinking about raise the appraisal by about 110% of the cost of the addition.  But appraisals can be tricky.  The condition of the original home effects the appraisal a lot.

I caution my customers to do the math and consider how long they are planning to stay on the property.  Sometimes the value of the addition is more than just monetary.  It might be a home they have no intention of selling with lot of sentimental value and they will benefit the from the change for years to come.

At first, during Covid, lumber prices were berked. Lumber came down, but labor prices are now berked. Things are substantially more expensive to get built. I  assume you won't be doing much of the work?

A buddy's deck and 3 season room was quoted at $30,000 right at the start of the pandemic. Its now $90k. Oof.

In reply to Appleseed :

Lumber did start to come down some, but before it got to reasonable, started back up. Unfortunately. Prolly not as high as it got, but still too high for me to be able to afford several honey-do's 

My wife and I have been talking about expanding our house. It's a 3 bedroom, 2 bath, single story, 1575sqft. 

We bougth for $372k, our current value is around $550ish on the low end. $600k would probably be relatively easy. 

If wanted to move to a house with an extra room, we'd be looking at $700k. And a new mortgage at 5%. Even if we sold our house on the high end ($600k) and rolled that equity into a new house at $700k, we'd still have mortgage of $400k and a payment of $2200. Not mention we'd have to do a contingent sale. 

To make matters worse, even houses at $700k don't have updated kitchens or bathrooms, or have older insulation and HVAC systems. 

The benefit to the addition would be that we could tailor that space to our needs specifically - like making into a separate unit for rental income or MIL suite. We don't have to fight with the market (aside from the cost of contractors or materials.)

In other housing markets, the jump to the larger home might not be as drastic. 

But if you love the place where you live so much you don't think you're going to move for a very long time, the addition is probably worth it. 

In reply to All Yalls :

The house has been in the family for 125 years, a Centennial Farm designation as well. Our initial estimate has been $85k so I am rounding to $90 because I get how things work. 

No septic, no plumbing, only issue is rerunning the gas line for the propane. 

Seven windows, three doors all shelf stock units. Basic tape and paint drywall inside, easy to match vinyl siding outside. Running a small propane/gas fireplace for heat on the west end of the room. Electric for outlets and fans as well as a set of LED can lights in the far west overhang/porch area. The initial drawing is rather clean and simple. 

Our buy in for the house was less than 50% of value and we will probably never sell it unless it's to another family member.  

Do it! 

Actually, I would not rush into this. You might consider hiring an architect to give you some ideas. You might get more house for only a bit more money. 

 

In reply to pheller :

Not against it. Two of the three remodelers that I have reached out to have or are directly associated with architects that they prefer we sit with initially. 

The one was impressed with with how my bathroom renovations both turned out.

(I somehow no longer have the shot from 6 years ago of the main bath)

Yea I would say a "forever home" is a lot different approach than a "today's home with tomorrow's maximum return." 

Personally, I would prefer something "smart" than something "luxurious". Something that'll save you money if you ever need to repair it later on, or can keep up with the changing energy price environment. 

I'm not liking the "notch" that you'll create between the new addition and the old house. If you gave more pictures or floorplan I'd gladly give feedback on that. 

An acquaintance of mine suggested that if you do an addition that you always go two stories, because adding the foundation and the roof are usually the two most expensive pieces. 

This was the rough pencil we threw together for the first estimate.  The notch has the ac unit in that area (north east corner) so it becomes a necessary encumbrance. I do not have a drawing for the rest of the floor plan or any of the preliminary drafts from the design build guy.

Got a few more pieces done for the shower.