Whether renovating, building or buying can be complicated with many moving parts. It comes down to your circumstances, but there are aspects you should consider before committing to anything.
When you're unhappy with certain aspects of your home, you may contemplate whether to buy new or renovate your existing space. Of course, both options have pros and cons, so let's dig in.
After you've lived in your home for some time, you may realise it doesn't have everything you need or want. Maybe it's missing a playroom or first-floor laundry. Or perhaps it's too small for your growing family.
If you're unsatisfied with your current home, you have two options: you can renovate it to meet your preferences or buy a new home that checks off all your boxes. The decision has two components: financial and emotional. We'll take you through the factors to consider when it comes to finances first, then help you unpack the intangible aspect of the decision.
Most homebuyers spend lots of time and energy searching for or designing "the perfect home" before signing any contracts or laying down funds.
Location, price, market trends, property taxes, homeowners association fees, and the property's condition are usually factored into a house hunt. Also, each buyer typically has a wish list that includes specific needs (the things the buyer has to have) and wants (the features the buyer would like but could do without if necessary).
While the home-buying process involves several important choices, buyers need to make one of the first decisions to shop for an existing home or build a new one.
Each path has its advantages and disadvantages. Here's a look at both sides.
The Benefit Of Renovating And Staying Put
Renovating can be a hassle -- but so can moving, and perhaps even more so. When you buy a new house, you're signing up to pack up your existing home and move to a new one. And there are consequences to doing so.
Living in a new neighbourhood can be less convenient -- you don't know your way around, the stores aren't the same, and the adjustment is potentially lengthy. Moving also means giving up the neighbours you like and your children's school district.
That's a big deal.
Another good reason to renovate? You'll have a home that caters to your specific needs. For example, say you're unhappy with your outdated kitchen and want a new one. You could find a home with a new kitchen, but you may not love the cabinetry colour. When you stay in your home and renovate, you call the shots about improvements.
Furthermore, you may find that renovating is more cost-effective than moving. For example, when you sell a home, you need to pay a real estate agent a commission for facilitating the sale. Then, when you move, you need to cover the cost of moving, plus pay closing costs on your new mortgage.
Renovating, meanwhile, can be done quite affordably if you have equity in your home because that opens the door to a home equity loan or line of credit that gives you access to the money you need to make those improvements.
Also, the right renovations to your existing house could give you a great return on investment so that when the time comes to sell it, you're able to command top dollar for it while getting to enjoy those updates yourself in the meantime. And in some situations, renovating could make it possible to turn your home into an income source. For example, renting it out to a tenant could be the option if you finish a basement.
The Benefit Of Buying New
On the other hand, there are many good reasons to buy a new home rather than renovate. First, you'll avoid the annoyance of living in a construction zone for some time. You'll also get out of dealing with the logistics of renovating, from securing permits to reading up on building code requirements.
Furthermore, if the cost of your renovation is substantial, you may find that moving to a new home makes more financial sense. Though you will need to apply for a new mortgage, interest rates are relatively low right now, and if your credit is strong, there's a good chance you'll score an affordable mortgage.
Finally, moving to a new home gives you a chance to enjoy different amenities that may not be available in your neighbourhood. And if you find an area with a superior school system, you may find that moving is positive for your children.
Building a new home doesn't offer the same convenience as buying an existing house. First, you have to find the land, which may not be in an existing neighbourhood; you also have to factor in the time to find an architect or builder and choose every new structure element.
You can limit the risk that your house will go over budget or take longer than expected by working with a reputable builder and having a good contract.
Joining an existing development may streamline the process, though it may limit your degree of choice. You also need to worry about systems, such as whether the land gives you access to municipal water and sewage or requires a well and septic system, along with any environmental and other permits.
The big advantage is you are much more likely to get what you want.
This factor alone is enough to choose to build over buying for many.
Still, there are other advantages, like creating a more efficient home that meets new energy codes and standards for heating, ventilation, and cooling, plus insulation and air filtration. Better efficiency is good for the environment and can save you money on your utility bills each month.
Buying An Existing Home
There are two primary advantages to buying an existing home: convenience and cost. Once you are pre-approved by your lender, you can shop around, pick out a home, and make an offer.
A qualified real estate agent can streamline the process by helping you find appropriate properties, guiding you through negotiations, and assisting with the paperwork.
Once your offer is accepted, you may be able to close on the deal and then move in within a month or two, depending on the circumstances.
Even though the process involves numerous steps—such as financing, viewing homes, making offers, home inspections, and closing—the convenience of being able to move in right away is compelling enough for many people to choose an existing home over a building.
Schedules And Cost
Buying a move-in ready home may be especially true for buyers on a tight schedule, such as those relocating for a new job or whose children will be starting at a new school.
Then there's the cost. In many (but not all) cases, it's cheaper to buy an existing home, according to data compiled by the National Association of Home Builders. Once you've found a prospective, existing home, use a mortgage calculator to better estimate the total cost of purchasing that home based on today's interest rates.
Depending on your target real estate market, prices for existing homes may still be quite favourable after the financial crisis and housing bust that significantly lowered real estate prices.
Convenience Vs. Customisation
Another reason an existing home may be a better option is if you would like to be in a particular established neighbourhood—near work, school, friends, and family. Odds are, too, that the home will have mature landscaping, so you won't have to worry about starting a lawn, planting shrubs, and waiting for trees to grow.
And if you want to live close to town, your best bet will be an existing home since most, if not all, of the land will have already been built upon.
On the flip side, the most significant disadvantage of buying an existing home may be that you won't get what you want. For example, you may not be in love with the floor plan and may wish that the half bath on the first floor was full or that there was another bedroom on the main floor.
Older homes, in particular, may be functionally obsolete, no longer meeting the needs of most buyers. For example, an otherwise beautiful four-bedroom house may only have one bathroom, or the kitchen may be too small, with no room for expansion.
Unless you find an existing home that has what you want and is in perfect condition, you will have to spend additional money on remodelling, repairs, decorating, and landscaping. These additional expenses should be factored into the overall price, especially when choosing among various properties or comparing the cost of building your own house.
A lot of the decision making around buildings vs. renovating vs. buying a house comes from your financial position and willingness to be involved in certain projects. While you will need some financial stability to undertake any of these three ventures, many other factors may significantly impact whether you want to become involved in a renovation or new build.
There is, of course, a great sense of accomplishment when it comes to finishing a renovation or new build, which you cannot play down either. However, assessing your personal and financial circumstances will mean you have the best chance at completing whichever project you choose to begin.
It may seem intuitive that starting with a fresh plot of land and erecting a new building will be the more costly option. However, in exchange for a clean slate, you'll be responsible for all the site work, the installation of the utilities, and the structure's construction from the foundation to the exterior finishes.
Because building new typically includes a more complex scope of work, more person-hours, and more materials, it will be the more expensive option. However, there are some instances where renovations can become more expensive.
Some Things To Consider Before Renovating
There are no two ways about it. Whether a facelift or a full tear down, Renovating can be a stressful project. Your ability to make quick decisions, juggle competing tasks, think on the move, and remain calm, cool, and collected is vital to getting the desired result.
It would help if you asked yourself some important questions to ensure you're not making the wrong decision about your property. Ask yourself;
- Is the cost of building a brand new house cheaper than renovating?
- Do I have the time to manage the project?
- What restrictions are there on my home (e.g. heritage listings)?
- Will my plans to renovate mean I'm overcapitalising (am I spending more on the renovation than the property is worth)?
Getting the right information for your circumstance ensures you're making informed decisions about your renovation that will provide you with the right outcome.
Some things to consider before building
Like renovating, careful planning is crucial to ensure a successful house build. Building a house from scratch will undoubtedly be one of the toughest yet most rewarding projects any property owner could do.
Similarly, you cannot undersell the planning, strategy, effort and, of course, money into building a new house.
But as always, there are several things to consider before you go knocking down an old place and laying the slab for your little slice of heaven;
- Do I have the finances to complete this task?
- Do I have the time to manage builders and tradespeople?
- Can it be achieved in any other way?
- Am I in a position to fund my lifestyle into the future after I spend money on building a new place?
- Will my local council approve my plans?
- What are the building restrictions in my area?
The most important thing to always consider when building a new place is whether you have the finances to finish the project. Your architect and builder will likely provide you with a quote, but it's wise to always budget more as you may encounter unforeseen problems.
Some Things To Consider Before Buying
If you've decided that undertaking a big project isn't for you, or you've got the capital, purchasing a new or existing property may be the right option. Deciding to purchase a new or existing house means you've got the flexibility to look for the perfect place.
It's your chance to find something just right for you.
Naturally, there are going to be some things that you need to consider before taking the plunge and making a big financial investment.
It is likely going to be the biggest purchase you make in your lifetime, and making sure you've dotted all the i's and crossed all the t's is of great importance;
- Do I understand all the costs involved (deposit, stamp duty, conveyancing, bank fees, legal fees, etc.)?
- Am I happy with the area that I'm going to be living in?
- Am I planning for children in the future - do we have enough space?
- Am I prepared for the ongoing maintenance costs associated with homeownership?
- Am I prepared to look around to ensure I'm making the right choice?
The most important thing is always making the right choice for you and your circumstances. Whether deciding on renovating over buying or building or considering what type of property you can afford, always do your research and do a bit more.
It can be all too easy to get overwhelmed in the renovating, building or home-buying process, so taking the time to research and plan will mean you're going to give yourself a good chance to succeed.
So, what's the verdict? Should you buy or build a home? The answer is, it depends.
There are pros and cons to buying and building a home, so weigh them carefully before deciding. If you decide to buy a home, do your research on the best neighbourhoods for you and find an experienced real estate agent who can help you get the most for your money.
If you choose to build a home, make sure you have a realistic budget and timeline in mind, and be prepared for some challenging but rewarding work ahead. In either case, we wish you all the best in your homeownership journey!
Experts agree that first remodelling your kitchen or bathroom is traditionally the smartest move. And while kitchens typically cost more to remodel than bathrooms, they tend to yield a better return on investment, so they end up paying for themselves over the long run.
Whether a full home addition or remodelling a room in your home, you can expect to go through five distinct stages: planning, budgeting, demolition, construction, and cleanup.
After stretching to buy a home, many buyers find themselves with a little leftover to fix the place up. But with a little planning and lots of patience, it is possible to find the time and money for all those home improvements. As one homeowner discovered, the secret is simple: Renovate one room at a time.