Remodel or Rebuild
DEAR TIM: My husband and I got a sweet deal on a 50-year old home built by my grandfather on a 5.5 acre, lake view lot. The 1,000 square foot house had been neglected for years and we have installed a new roof, refinished hardwood floors and kitchen cabinets and lots of other cosmetic work. But there are still serious wood rot issues, cracked brick, etc. Is it better to continue remodeling and adding new rooms or should we rebuild? Amanda B., Byrdstown, TN
DEAR AMANDA: Every situation is different and there are perhaps 20 key variables that factor into making a wise decision as to whether or not it is better to remodel an existing home or scrape it from the lot and start over. But you have already provided one very important clue that may be the tipping point with respect to rebuilding the home.
My father-in-law taught me years ago that nothing enhances the value of real estate like a view of water. The fact that your large piece of land has a lake view and you purchased it for a low price could work in your favor if you get an accurate appraisal as to the amount of equity you might have in the property at this time. There is a distinct possibility that you could be sitting on top of a real estate gold mine. I realize you have already invested time and money in starting to fix up the home, but you may discover that it is a much better investment to put money into a slightly larger mortgage payment.
The first thing you need to do is make a realistic list of the amount of space you and your family need. Try to plan towards the future if you feel your family size will grow. A 1,000 square foot home works for some people, but you may discover you need a larger home to fit family, guests and visiting relatives.
If you discover that you need an additional 900 square feet of living space, the challenge will be how and where to add it. It is not uncommon to pop the top off of a home and add a second story. Professional remodelers do this on a regular basis and often the disruption to your existing home is minimal. But if you decide that room additions that bolt on to the sides of your home are better, then be sure you end up with a floor plan that really works and rooms that are the right size.
Another clue you provided that will help you and any remodelers who visit is the state of the existing structure. Your comments about the cracked brick and wood rot lead me to believe that perhaps your dear old granddad might not have been the world's best builder. Many lake houses I have seen were built in places that did not enforce a building code and the construction standards were minimal. There is no doubt your grandfather had great intentions, he just might have been handicapped by a lack of experience.
The point is you can't always turn a sow's ear into a silk purse as cheaply as you can build a new home. The fact that your lot is so large gives you lots of latitude with respect to placing a new home either close to the existing one or possibly on a more ideal spot on the lot that might take better advantage of the view towards the lake.
One strong possibility is locating a modular home builder in your area. You may discover that you can have a brand new home that is ready for occupancy in as little as eight weeks. The newer modular homes look just like a site-built home and many are very well constructed. If you decide to do this, be sure you look at plenty of plans that afford expansive views on the side of the home that faces the lake. A great plan on a superb lot will help you build even more equity into the future.
The ever-rising energy costs also factor into these decisions. An older home may have countless air leak locations, inefficient insulation, old windows and doors, etc. These functionally obsolescent components can force you to spend hundreds if not thousands of extra dollars per year to keep your house reasonably comfortable. A newer energy-efficient home with state-of-the-art windows, heating and cooling equipment, etc. allows a homeowner to redirect those same dollars to a mortgage payment on a newer home.
Quality of life issues also should be considered. Repairs, things that breakdown, growing honey-do lists add to the stress of daily life. Arguments between spouses about repairs that go undone can lead to all sorts of problems. A problem-free new home can make people feel better about themselves and help build strong relationships. If you can afford to build the new home, you will never regret it.