I often meet people in my model with the decision of “do I renovate my current house or buy a new home.” There are downfalls to renovating your existing home.
The average kitchen remodel (demolition, new cabinets, new countertops, new flooring, new backsplash, new electrical, new lighting, new plumbing, new appliances, removing a wall) takes about three months or more. If a bathroom remodel is part of the renovation, that could add another month on. Add on two months or more for planning, making selections, and building permits. You could be looking at a six month process or more. You could build a new home in less time than that.
You will need a temporary kitchen with a refrigerator and at least a microwave. You may be eating out a lot more than usual. Remember, you will not have use of a kitchen sink. All food preparation and washing dishes will be done in a bathroom or utility sink. Renovation comes with a lot of noise. That is something to keep in mind if you work from home or have young kids that nap. Renovation is also messy with debris and dust throughout your home. Are you there every day to let workers in or do you have a lock box for people to come and go with free access to your home?
3. The Cost
The average kitchen remodel is $35,000-$60,000. The two main factors in the cost are size of the space and materials selected. An average bathroom costs $20,000 and up. That could be $80,000 invested in to your existing home. There are two theories for return on investment. From a real estate standpoint, a homeowner could expect 80% of that back when selling. From an appraisal standpoint, your home has not increased in square footage. No additional bathrooms or bedrooms have been added. An appraiser may award you an additional $10,000 from the same home that sold down the street. Granted your home may sell faster than a home that needs updates, but is losing that much money worth it?
Instead of spending $80,000 to renovate your kitchen and bathroom, you could use that money plus the current equity in your house toward a new home. Chances are if you are renovating your existing house, you may need to also look at the condition of your carpeting, flooring, paint, windows, shingles, and HVAC system. A new home will have everything brand new with warranties. New homes are also more energy efficient which would save you money on energy bills.