Jump to content
The Extension vs Buy Elsewhere game
13 replies to this topic
Posted 25 February 2013 - 07:00 PM
APOLOGIES LONG STORY
So Dh and I currently live in a hohum suburb in Canberra. I'd like to think better street in the average suburb.
I like the house at the moment and to be honest the area is quite nice (I think it just has bad stigma). I'm a ten minute (or less) drive to work and can walk to the local shops in like five minutes. I have beautiful views of the Brindabellas (think snow sprinkled on them in the winter) and we have a killer deck that melts everyone's hearts when they visit. BUT with all these positives it is small. It is a small three bedder (think no two single beds fitting in bedroom two and three and you have to have bunks - I have three kids), a pokey en-suite (but hey it has one) and one living area. A roomy family room that is actually the dining room (because the dining room is a walk through). The house currently valued would RRP for around 450K. We are yet to renovate the existing 1980s bathroom and en-suite. We have been told if we do this we could expect 475/480K. We have pretty much renovated every inch of the property except the bathrooms.. it has my soul in it!
DH and I have just locked in the extension plans we love. It makes it a double story four bedroom home with a massive rumpus upstairs that takes in the amazing views. The builders quote is 280K. I think this is probably reasonable but is 30K over what we were maximum budgeting for. This is driven by the fact I want to budget for an additional 50K for the bathroom renovation and any overspend we might have.
So now we are looking at what we get for value. With the extension we are certainly over capitalizing. If I can sell the house for 450 today and then add the 280K I have like a >700K house. The maximum ever reached in my suburb is like 620K. Over capitalizing YES. In saying this we bought the house many years ago so we own half of it... long story short... we would need a <500K mortgage and if we needed to sell would come out in front. But obviously not as much in front if we sold today.
If we purchased elsewhere around the same 700K budget in Canberra I can't get anything I like. I have my 'love' surbubs that I want and DH wants it pretty much renovated. To marry our needs we'd probably need closer to 800K.
So what would you do?
- do the extension knowing full well you are overcapitalising by about 80K (but acknowledging we have no selling/stampduty costs).
- buy a house worth 700K and one of us has to compromise (either on suburb, inclusions or renovation).
- buy a house worth 800K and throw the budget out the window.
(In options 2/3 we know if we need to sell for some reason we'd get our money back).
Dh's family think we should go ahead with the extension as they know the views and can see it would become our forever house. My parents are much more buy elsewhere and ensure if we need to move we'd be able to recoup our money. DH and I are hopeless at decision making. My heart is lending towards the extension but my head is saying move to the 700K option.
Posted 25 February 2013 - 07:06 PM
I don't know which option I'd choose tbh, but $50000 for a bathroom Reno? Have you priced the renos you want yet? It seems excessive to me (I work for a company that sells bathrooms)
Posted 25 February 2013 - 07:07 PM
If you are planning on staying long term I vote for the extension. No real estate fees, no stamp duty. Just be warned that a lot of extensions typically over run by 10% cost wise, no matter how well you plan!!!
Posted 25 February 2013 - 07:11 PM
Oh sorry LiMa.. the 50K is to cover bathroom reno (+ensuite).. I'm envisaging say 15-20K here and then the rest for any budget blow outs of the build. If at the end we haven't got the budget blow out we would want to spend it on solar panels.
Posted 25 February 2013 - 07:15 PM
Lol that makes so much more sense. I was mentally running through our most expensive products trying to come up to $50k and was wondering if we are under charging lol
Ive been thinking about it more, and I think (given your views etc) I'd extend and stay
Posted 25 February 2013 - 07:41 PM
This will be us in about 8 years OP. we need to pay off two thirds of our current mortgage before we will consider an extension and total inside renovation of the existing house as I know how expensive it will be. It's a tough decision because you never know how the area will increase in value over a long time.
In your example, I'd either extend, or blow the budget and buy the perfect house. I wouldn't take option 2, too many compromises.
Posted 25 February 2013 - 07:45 PM
Probably not what you want to hear but given the planned cuts in the public service I'd not want to be overcapitalising in the current (possibly overpriced) Canberra market. Just my opinion! If you can be patient there may be some "bargains" to be had in the not to distant future (my guess 12-18 months) on existing housing.
Posted 25 February 2013 - 08:35 PM
Is your block so that you can still do extensions, without having to go up? I know it means not capitalising on the view, but you could possibly increase your house size without having to spend quite so much.
Rather than doing extensions you love, is there a compromise you could be happy with?
Posted 26 February 2013 - 06:19 AM
We just went through the same thing. We bought our house (10 squares!) 5 years ago with the intention of extending it. We had our plans ready to go, and started getting quotes, and it was looking like it would be cheaper and easier to sell and buy something already done. The problem was, what I "wanted" was only available in the more expensive neighbouring suburb, and had a price tag of around $1.3 mil.
We could have bought something with enough space for less, but we would still need to spend more money to finish it in our style.
So, we went with the extension option, and we did it as owner builders (although with a qualified builder doing the work!). We haven't quite finished yet (still need to add skirtings/archs and put the new kitchen in, new back garden etc.) but it's the best thing we've done. My heart still flutters when I look around and see how beautiful it is, and I can't remember any of the houses we looked at, even the $1mil + houses that were as good.
Financially, although we've increased the value massively, we probably don't have much more equity than what we had previously, and it's been exhausting because we have done a lot of the labour work ourselves. But, we do have a house we love!
I think it all depends on your personality. Some people are more practical and are happy to have an okay house with the right layout etc., while others want their house to be beautiful. If you're the latter, then I say go for the extension.
Posted 26 February 2013 - 06:39 AM
How much will stamp duty, agents costs and moing costs be? That might narrow the gap a bit, and make the extension seem like a better option.
$300k for an extension in a suburb with $400-$600k ousts sounds like a lot to me, but I am very much in the non emotional, financial decision making camp. If you think you won't come to regret spending
$80k you will never get back, the extension does sound like the better option.
Posted 26 February 2013 - 06:40 AM
I wish I knew the answer we are in the same situation no ensuite though, but massive lounge, but tiny bedrooms no room for two single beds here in one of our rooms either.
One other cost is where would you live while renos are done?
also , homes with stairs have very poor heating and cooling costs, as you can't shut off one level from the other all your heat flies up the stairs.
I've decided i can't live through renos. But I'm also not keen on the whole selling/buying exercise, so we're just going to put up with it for a bit longer. I'm going to try to save up to buy what I really want, in our same suburb...or win lotto.
I do wonder if houses will be a lot cheaper in canberra in a year or so but that means losing a lot on the home you are selling as well..
Posted 26 February 2013 - 06:58 AM
I think that the $280,000 will probably hit more the $350,000 mark. I am not sure of ACT prices but we paid that($280,000+) for a single extension in Vic.
We paid $250,000 for the house originally and maybe all up $350,000 for the renovation. I think we could sell for $800,000 to 1m. Quite a few houses are selling in the area now for excess of 1m. We did not want to move or pay stamp duty and we live in a very good area in the suburb. I don't think we would have renovated if houses were not selling for those amounts; i keep a strong watch on the propery market here. We can't lose money on the house now, even if the market drops a bit.
Where are you going to live during the build? We moved three times during ours.
I also found the whole experience stressful and draining. Dealing with the staff from our builder (volume builder) was a nightmare at the end of the build. That made a pretty much easy build/reno into a very unpleasant experience. We had good tradesmen (we brought them in) and some fantastic outlet stores (saved us heaps on appliances etc) that saved my sanity.
Are you using a volume builder? You need to investigate whoever you are getting to build. Make sure you have recommendations (not online ones!) and see their work. Make sure you read your contract very well before you sign it. I would advise getting a lawyer to read it as well. On paper building seems easy and uncomplicated but you have to be very careful who you choose to build with, very careful, or your dream house will turn into a nightmare one.
I spent yesterday at VCAT (Victorian Civil and Administrative Tribunal) with friends who was treated badly by their builder (volume builder) and due to this builder has now lost their health, their retirement money and will most probably lose their home to pay for the lawyers and repair the work the builder did (which they will do at a loss as the builder ****ed it up badly). Another friend two years on is still not able to move into their home as it is unfinished and built to a poor quality, another one who has lost their job, retirement savings and has paid out $$$$s in legal and other fees, just to live in their house again.
Doing a reno is a big step to make. Do your homework about the benefits and costs of what you want to do. If you are going to overcapitalise with a reno, personally i would recommend finding a house that is what you want that is already established in another suburb.
Edited by katpaws, 26 February 2013 - 07:32 AM.
Posted 26 February 2013 - 09:19 AM
In Canberra it is nearly always cheaper to move than renovate. Overcaptialising in Canberra is a huge risk, even in our overpriced market.
A friend recently got quoted on a reno and knock down rebuild on her place in Kaleen, the cost was the same for either option She took the rebuilld option since she's much more likely to get her money back with a new house than with an extention if she needs to sell.
Posted 26 February 2013 - 09:33 AM
As someone who used to live in Canberra in the Belco area - I would be very worried about over capitalising. You might think it is your forever house - but what if your circumstances change and you need to move cities and cant recoup what you have invested in the house. I only would consider a costly renovation in an inner ring suburb, or at least a suburb where some houses are valued at that total of what your house would be worth. Sorry.
1 user(s) are reading this topic
0 members, 1 guests, 0 anonymous users
A little fun never goes astray when celebrating special occasions and Father's Day is no different. We've rounded up some funny Father's day cards for your husbands, fathers and other important men in your lives.
The possibility of using electronic bracelets for mothers and their newborn babies is being investigated by Adelaide's Women's and Children's Hospital.
As a parent there are so many milestones to look forward to. That first smile, first word - and, of course, that first step.
Tomorrow my friend Julia launches her first book. And while we're all overjoyed, the success is tinged with sadness. You see, Julia has stage 4 bowel cancer.
Call me boring, but I don't think that when it comes to choosing my twins' names is the right time to use a good pun.
The babies of 2015 will thus be thrilled to paddle their happy baby legs in these brand new flamingo and swan baby inflatables.
When Chicago mum Ivette Ivens saw a French bulldog puppy who had the same birthdate as her son Dilan, she "just knew it?s meant to be" and took him home. Five months later, puppy Farley and Dilan are the best of friends - as Ivens says, "I?m pretty sure Dilan thinks they?re both the same species, as they walk at the same level and are both going through the stage of chewing on everything.?
Here are 10 tips to help make breastfeeding successful and stress free for both you and your baby as quickly as possible.
This mum had a big clean up job on her hands.
Pandas are the only ones who benefit from under-eye shadows. If you're not fluffy and cute, you'll just look tired.
A mother has died after she was denied a pap smear because she was deemed "too young" to need it.
A childcare centre in Sydney has banned birthday cakes after parent complaints about excessive sugar and children with allergies being left out.
As the radiographer moved the wand over her abdomen, Shelley King got the surprise of her life.
Louise Fulton Keats shares her recipes for babies and toddlers, including corn and sweet pikelets, pumpkin and pea risotto, and cheesy bunny biscuits.
A 31-year-old man has been arrested over the death of two-year-old Nikki Francis-Coslovich in Mildura.
Pregnant women will no longer be barred from adoption waiting lists in NSW, after the Baird Government decided the practice was discriminatory.
Magnesium is the fourth most abundant mineral in the body, but we don't talk enough about it and the vital role it plays in great health and energy, as well as disease prevention.
Take heart in these principles that will transfer seamlessly from the workplace into your new life as a parent.
A creative outlet for many, there are some savvy women complementing their blogs and businesses with riveting Instagrams feeds. We've chosen a few which have bucketloads of appeal; there are some big time players and some smaller local ones, and they each bring their special brand of magic to the Instagram experience.
The new Volvo XC90 SUV's focus on keeping you safe does not come at the expense of comfort in the XC90.
Kim Kardashian has revealed complications during pregnancy means she might have to have a hysterectomy after the birth of her second child.
Loath as you may be to admit it, chances are that at some point you have found yourself in the kitchen late at night, devouring food.
They say twins have a unique connection. If this cute clip is anything to go by, these toddler sisters like to use their special bond to try to fool their mother.
Getting out of the house is a big priority in the early years of parenthood and you need to take a well-stocked kit with you. We've chosen 10 of the best nappy bags sure to appeal to dads in style and function.
To celebrate Essential Baby reaching half a million Facebook fans, we have a Mountain Buggy Swift to giveaway to a lucky fan.
Get your free ticket to the Sydney Essential Baby & Toddler Show for September 25-27 - register online now.
Top 5 Articles
For women trying to encourage their partners to take more interest in fatherhood, it could be the ultimate incentive.
Conditions affecting the gastrointestinal tract are common in modern humans, and many are on the rise - including irritable bowel syndrome (IBS), inflammatory bowel disease (IBD) and coeliac disease.
Tired of being asked about their baby-making plans, Australian couple Matt and Abby decided to give a creative answer.
I bet your to-do list today is long. But somewhere on that massive list, are you making time for your pelvic floor?
Some babies get excited when mum or dad come to get them from their cot after a nap.
Even if you aren't heading to the Northern hemisphere in the next six months, you can't help but love the amazing food-themed knits for babies and kids by cult kids brand Oeuf.
A paediatricians' group is recommending that infants at high risk of peanut allergies be given foods containing peanuts before they turn one.
Supermarket home brand foods, long derided as cheap and inferior, contain far lower levels of salt than pricier, branded rivals, new research shows.
Ever dreaded the prospect of a long flight, dreaming about how wonderful it would be for a nanny to entertain the kids?
Tired of being asked about their baby-making plans, Australian couple Matt and Abby decided to give a creative answer: with an unusual photo shoot with their 'baby', a groodle (poodle/golden retriever cross) named Humphrey. The talented Elisha from Elisha Minnette Photography caught all the precious shots.
My husband was sure that Danger was a good option for a boy. And as the pregnancy progressed, it actually started to sound really good.
In a world first, a healthy baby has been born from the same womb that nurtured his own mother.
It's one way to make your baby stand out from the pack – giving them not one, but two first names.
When I fell pregnant with my second child I was, naturally, very excited. Then it all started to come back to me - and I freaked.
You're out shopping with your little one and they're incessantly whining that they want a treat. It's easy to say no ... the first time, at least.
Three months ago, my wife, Chrysta, and I were driving along Melrose Avenue in Los Angeles when she let out a harrowing cry.
There comes a time when your child starts having different views to you. I didn't realise that time would come so soon.
To celebrate dads and families, we are giving away a Picos Pack from Pacapod Australia filled with a few extra goodies ENTER NOW
Get your free ticket to The Essential Baby & Toddler Show and save $20 - register online now!