This week has been rather full on for us as I have seen so many family and friends reach milestones in their life.
A lovely friend had a baby boy last night.
Mr17 has his graduation from high school ceremony this week.
Giggle_Smile has accepted an offer on their home.
And a relative who died very suddenly was buried.
So reflecting on all the sad and happy moments life has bought to us this week it made me think about change. Some of us cope with making big changes easier than others. I must confess I like to ponder things before making a commitment to change. My DH says I am a little slow at changing gears
. But some decisions even he will agree require a lot of pondering. One of the big decisions we often face as adults is do we buy a new home or renovate the existing. I thought this
article covered a lot of factors you need to consider when making this decision. I hope it helps any of you who are facing the milestone of changing homes.
Renovate or buy?
It's a big decision. Should you move to a brand new, more suitable property, or stay put and renovate the house you currently live in? Before making any sort of decision, consider your long term goals, along with the points below.
Track record
One of the major advantages of renovating an established home is that you can already measure the price performance over time. This determines how much the house has been worth over the last few years and allows you to estimate what future potential growth will be.
On the other hand, if you build a new home in the right area (perhaps a new estate on the outskirts of a capital city) you may be able to catch the beginning of a growth spurt in prices.
Over-capitalisation
While you can measure an existing property's potential growth, you must also be wary of over-capitalising. This is where the cost of your renovation outweighs the market value it will add to your home. Some believe that by spending a great deal on renovating their home will reap thousands more in the re-sale. This is not always the case.
While unlikely to be a problem in housing estates, if you build a new home in an established area you can also have problems with overcapitalisation. For instance, if you build a flashy house in a street full of weatherboard shacks you will most probably fail to recoup your investment. It is best to research your local real estate market to gain an understanding of what existing homes are selling for and what gains have been made over the past few years.
The area
This can be a major factor in your decision to renovate, particularly if you have children. Uprooting your family, leaving behind friends, the local school, neighbours and near-by amenities can easily tip the scale on the side of renovation. But if your family is young and growing, or if the area you live in has serious problems, a new start might be just what's required.
State of the house
Part of your decision to renovate may hinge on the state of your current home. A building inspection can uncover potential problems such as dry rot or white ants - that may mean moving is more viable than the costs involved in rectification.
Budget blow out
You've probably heard horror stories from your friends of renovation budget blow out. For this reason, it is exceptionally important when you begin a renovation to be clear about what you want so that your builder can quote accurately. And ensure you add an extra 10 per cent to 15 per cent on to your budget estimation to cover any unforseen costs.
If you buy a new, pre-built house you can be sure of exactly how much you are going to spend but be aware that any changes to the house may cost you extra. If you have a new house built there is still some risk of a budget blow-out. However, your contract should provide at least some security against extra costs.
Overall, you need to do some homework and weigh up the advantages and disadvantages of each option. For example, if you decide to move house there are costs such as:
Stamp duty
Refinance costs
Agent fees
Legal fees and conveyancing costs
Building and pest inspection reports
Moving costs
On the other hand, if you decide to renovate, you will need to consider the costs of:
Labour (builder and contractors)
Materials
Permits and council fees
Design fees
Inspection costs
Repayments for any finance that you may require for your project
Knockdown / Rebuild
If you like the area you live in but have certainly outgrown your old house (even past the point of renovation) there is another option. Knocking down the old house and building a new one in the same location (knockdown/rebuild) is growing in popularity, particularly in more crowded cities like Sydney.
Besides remaining in the same location, other advantages of this approach include avoiding having to look for suitable vacant land or paying stamp duty. On the down side, you will have to pay rent in another property for the period of the project.
Have you experienced any major milestones this year?
Mine was having my son finish school. Soon my taxi service won't be required and he will be out doing his own thing more. I'm not sure what it means for me next year but I am looking forward to seeing what direction my life changes.
Milestones in Life
. I will invite you over for drinks if I ever get it
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