Remodel what I have (major) or buy something bigger?

mikester · 01-03-2015, 02:28 PM

I've been pondering this for a while now. I live in the LA area and we bought our house well enough before the boom to be in good shape but not far enough in advance to be in great shape.

We have decent equity and the house has never shown a paper value lower than what we paid. Our neighborhood is a very good one and there is very little inventory to choose from and houses are usually sold before they are even really on the market.

With this in mind it would be a challenge to get into something bigger at a 'reasonable price'. So I have been considering simply redoing the house I have to what I need. Our lot is smaller than I'd like but I can work with it and have pretty nice looking dreams about what it could be. It would be expensive though I'm sure.

Still, depending on the cost per sqft it could still be less than buying a house that may be enough of what I want.

Problem is - I don't exactly know where to begin. I was going to go talk to the city planning folks at the recommendation of a contractor I know to see if they will let me increase my sqft as much as I want to. I don't really want to increase the foot print of the house on the land I just want to go up and build a basement (I already have a basement garage so it would be expanding that). Energy efficiency, solar panels (makes the wife happy) and all that.

The financing part is not clear to me though - would it need to be a construction loan or a HELOC (which wouldn't nearly be enough to cover this type of thing). I'm expecting this to run into the $200-300k range.

I'd have to move the family out of course as we'd be going down to the studs and then some. Earthquake ironwork probably, basement excavation, adding a 2nd story and then within that building the dream with a large workshop/garage basement. 4-5 bedrooms plus an office, a nice living space/family room and kitchen and a deck overlooking the pacific off in the distance (you can see it nicely from my roof now).

It's an ambitious plan but if I could do it for what I have in mind or even a little more I still have saved $300k over buying a similar setup that I see for sale today.

I also plan on talking to my bank to see what they say but I figured I'd hit up the brain trust as well. Outside of my bank which is a national I also could go to my local credit union and the local bank in town.

The current house is circa 1952 built by the original owner with a crooked ruler. I will be happy to tear it up.

DanielDudley · 01-03-2015, 02:56 PM

Quote:

Originally Posted by mikester

Problem is - I don't exactly know where to begin. I was going to go talk to the city planning folks at the recommendation of a contractor I know to see if they will let me increase my sqft as much as I want to. I don't really want to increase the foot print of the house on the land I just want to go up and build a basement (I already have a basement garage so it would be expanding that).

Yes, go there first, to the building inspector or zoning officer, and find out if it is even possible for you to do this. Then set your budget, and see if you can find a good architect who specializes in what you want. See if the architect agrees with your budget before you start to have plans drawn.

Plans are an arm and a leg, talk is cheap. Start with the talk. Around here it would be cheaper to tear it all down and build fresh. If you can rework what you have, I'm sure you know that you could stay well under 100K. You are going to quadruple that to get what you want, IMO, just from what I am hearing.

stomachmonkey · 01-03-2015, 02:58 PM

You could PM look_171, it's what he does and he is in LA.

mikester · 01-03-2015, 03:33 PM

Quote:

Originally Posted by stomachmonkey

You could PM look_171, it's what he does and he is in LA.

Yeah, he's actually even been to my house once. I was going to ping him on it but figured it was just as well to open the question up to see what sticks.

stomachmonkey · 01-03-2015, 03:37 PM

Well if you can get $300k in value above what you would spend it's almost a no brainer.

Also best shot at getting exactly what you want which is priceless.

SeanPizzle · 01-03-2015, 04:10 PM

Never underestimate the sheer PITA factor of your local building dept. they will put up many roadblocks and have their hand in your pocket at each step of the way. I just built a shop with finished space upstairs (~750SF).

You will have lot coverage limits. SF/Acre
You will have limits as to height, especially if you will block existing views.
You will have to include fire sprinkler system in all new construction. Expect to add $30K+ to the price of the build for what you are describing.
You will need to mitigate any existing foundation/structure to meet new seismic standards if you want to add the second floor.
You may need to re-do your sewer connection and water main in a 60 year old house.
You will need to pay everybody: traffic impact fee, sewer upgrade fee (based on number of bathrooms), school fee, parks fee, construction tax, plan review fees, and all the other building permits. I would expect 25-65K for all this depending upon where you live.

You may be better off, as was mentioned, to do new construction from scratch. Ask a builder who works in your City what the differences are between a one-wall remodel and new construction. Ask the same question of the building department. Keep in mind the Building Dept's goal is to maximize their pension plan...er...fees

Christien · Christien's Garage

We had a similar decision to make - major reno or move? Not quite the same as you - we had plenty of inside space (3 BR, 2100 sq ft on 2 floors + finished basement), but we wanted more outside space (currently 50x150 foot lot, wanted about 2 acres). We looked for the better part of a year and everything we found was either way too expensive or needed another $50k of work. We ended up staying and doing to reno, and a large part of that was the fact that we could make our house perfect for US - not for anyone else, for US.

Now, a big factor in that decision, and this should play into yours, was how long we planned on staying here, and what we expect to get out of it when it's time to move. Many folks do renos that will bring the biggest return. We said nuts to that - this is OUR house, not the next guy's. We plan on staying here until my wife retires (another 20 years), so we're in it for the long haul. We chose flooring which we love, but is a bit much for other folks. Same with fixtures, tile, countertops, etc. plus we put a pool in. Now we're extremely happy with the house, and really don't see moving, and when we do, we know we won't have maximized its value. That's fine with us.

JavaBrewer · JavaBrewer's Garage

The main question is how attached are you to your current neighborhood? Would you prefer to invest the $300K and have a home you want in your familiar neighborhood or would you prefer to relocate and move into an already done home? I have seen complete remodels (to the studs) take ~ 1 year, most take 6-8 months. Your neighborhood sounds incredible - the challenge IMO would be to strategically keep the charm of a 1950's crooked ruler home while incorporating the newer conveniences you desire. I would suggest you seriously consider exactly how much more space/rooms/baths you need and cut it down a bit from there. Focus on some high end finishing to give the home a timeless feel that you will enjoy for years to come.

Two years ago we moved from a modern 4000 sq/ft 2 level home into a 70's era 2300 sq/ft 1 level home. I sunk $80K in upgrades (me doing most of the labor) and honestly I am happier here by far.

nostatic · nostatic's Garage

How long will you want to stay in the house? You may be in temp housing for a year while the remodel is done. Yeah, they say 3-6 months...hahaha

If that year of pain is offset by wanting to stay in the house for the next 30 years, then probably worth it. 20...maybe. 10...hmm...

Depends on your circumstance. (un)luckily we're priced and timed out of ownership in LA so in our case it is just where/when we'd rent next.

mikester · 01-03-2015, 05:33 PM

I'm not interested in the crooked ruler charm. It's not charming, I'm an engineer and it annoys the hell out of me.

fintstone · fintstone's Garage

Sell it and buy what you want...if that exists.

look 171 · 01-03-2015, 06:12 PM

Hey Mike,

Your area is very desirable, you can over build a bit and get your money right out when the time comes to sell without any problems. The biggest issue I see is the foundation. No way they'll allow you to go up with out a new foundation. Be prepare to pay 12-15 K for fire sprinkler system. Your other issue is off street parking. That will almost dictate the allowable sq footage on the addition. You can dig into that basement but how far can you go? Depending on the engineering, the money might be the same as if you were to go up. The value is going up. Everyone wants a view of the ocean. I have taken an old Spanish and turned it into a large ultra modern home. There's a lot you can do here. The planning is going to take 3 months +. Yep, the city will try to rape you every corner you turn. Get with an architect and start talking about building details and cost. When I am involve from the very beginning of a project, I make sure the owner do not pay the architect in full unless he get the plans approved for construction. Before he submits that, you need to nail down cost with the builder. Once he submits it, you get to pay for those drawings so there's going back.

Where will you move to? The South bay is a beautiful place and safe to raise kids. Speaking of kids, my little boys still play with their rc cars when they are given a chance. The battery you gave us is still kicking. That's one tough little battery. Thanks again. Call me if you need to talk. I am more then happy to walk you through the process and give you my 2 cents.

Jeff

mikester · 01-03-2015, 08:48 PM

Quote:

Originally Posted by look 171

Hey Mike,

Your area is very desirable, you can over build a bit and get your money right out when the time comes to sell without any problems. The biggest issue I see is the foundation. No way they'll allow you to go up with out a new foundation. Be prepare to pay 12-15 K for fire sprinkler system. Your other issue is off street parking. That will almost dictate the allowable sq footage on the addition. You can dig into that basement but how far can you go? Depending on the engineering, the money might be the same as if you were to go up. The value is going up. Everyone wants a view of the ocean. I have taken an old Spanish and turned it into a large ultra modern home. There's a lot you can do here. The planning is going to take 3 months +. Yep, the city will try to rape you every corner you turn. Get with an architect and start talking about building details and cost. When I am involve from the very beginning of a project, I make sure the owner do not pay the architect in full unless he get the plans approved for construction. Before he submits that, you need to nail down cost with the builder. Once he submits it, you get to pay for those drawings so there's going back.

Where will you move to? The South bay is a beautiful place and safe to raise kids. Speaking of kids, my little boys still play with their rc cars when they are given a chance. The battery you gave us is still kicking. That's one tough little battery. Thanks again. Call me if you need to talk. I am more then happy to walk you through the process and give you my 2 cents.

Jeff

Technically that basement is already a 2 car garage but it's just not wide enough to put too cars in and be able to get out of them. My hope would be to expand that to actually be able to get into and out of the cars and maybe one additional car width under the house for a work area.

Otherwise the hope is to go up, I don't think anyone's view will be affected by it. I am sure I will need a new foundation and would prefer to put an earthquake safe structure in place. The fire sprinklers are unexpected though, when did that come into play? I haven't seen any recently renovated houses that have them.

mikester · 01-03-2015, 08:51 PM

I don't think we are leaving where we are anytime soon. We have already been in the house 11 years in February. If I were to remodel it as I want I imagine we would be in it until we could no longer manage it on our own.

look 171 · 01-03-2015, 09:48 PM

Quote:

Originally Posted by mikester

Technically that basement is already a 2 car garage but it's just not wide enough to put too cars in and be able to get out of them. My hope would be to expand that to actually be able to get into and out of the cars and maybe one additional car width under the house for a work area.

Otherwise the hope is to go up, I don't think anyone's view will be affected by it. I am sure I will need a new foundation and would prefer to put an earthquake safe structure in place. The fire sprinklers are unexpected though, when did that come into play? I haven't seen any recently renovated houses that have them.

Depending on additional sq footage, a larger garage maybe needed. Sprinkler system is usually based on that, but sometimes required by the total percentage of walls remodeled. This includes both interior and exterior. Again, a lot of these requirements are a little different in each cities. Check with planning.

If I remember correctly, you also have hillside to deal with. That in itself is a real PITA. Nothing too bad, just a money fix. The hillside ordinances in the City of LA has gotten so bad that my architect decided to not take any hillside job in LA anymore. He has it easy, he's a lic architect and structural engineer.

look 171 · 01-03-2015, 09:56 PM

Quote:

Originally Posted by mikester

I don't think we are leaving where we are anytime soon. We have already been in the house 11 years in February. If I were to remodel it as I want I imagine we would be in it until we could no longer manage it on our own.

You live in paradise. Its 75 degrees 10 months out of the year.

We are in a two story house(1950), and we have decided that if we ever move, it will be a single story in the flats. No more stairs says my supreme commander. I think 25 years of stairs will be max for us. I like to move before that.

Scuba Steve · 01-04-2015, 02:34 AM

It sounds like the location would be hard to duplicate. I'd at least seriously explore adding on to what you have before looking for a new neighborhood.

ckelly78z · 01-04-2015, 05:49 AM

It seems like the difference between a $100,000 rebuild and a $300,000 rebuild is the quality of the materials used. Everyone wants marble countertops, stainless steel double ovens and fridges, travertine tiles throughout, and a large en suite with custom fixtures and a 15 head shower. These things are all desireable, but truly not necessary unless the wife demands it. I'm just saying that the use of top of the line fixtures, appliances, and materials can make or break a budget that may also have to include seldom seen structural improvements, and other unseen issues from infrastructure.

mreid · 01-04-2015, 06:05 AM

I've remodeled two homes and if it wasn't for location, I would have been better off moving. To me, that is your deciding factor.

The first was a modern home that was built as a one room bungalow originally in 1950 and had eight additions added over the next 50 years. It was in Short Beach, CT and overlooked Long Island Sound. My budget was $200k in 2004 and 6 months. It took 1 year and cost $300k (mainly due to CFO change orders!). I sold it in 2010 after my wife passed and lost about $100k. Here it is 90% complete:

The second is my current home in San Antonio. We gutted the kitchen and the entire first floor. Budgeted $120k and 3 months. Took 5 months and $160k (again some late additions plus our builder hit a deer on his motorcycle when it was 80% complete).

My point is that location is everything and be careful to not only focus on what you don't have, but recognize how important what you already have is. What ever your decision, it is your decision and you have to be all in! Good luck!

onewhippedpuppy · 01-04-2015, 06:27 AM

The big things I see that need to happen:

1. Figure out what it costs to move, go do some house shopping. Find examples of what you want, where you want.

2. Figure out what it costs to remodel. Most city zoning offices aren't all that helpful, and will quickly revert to asking for plans and engineering approvals. They won't typically tell you yes/no or cost, because they don't want to say something that can be held against them later. I think your best bet is to consult with an architect that is familiar with local codes. They can tell you what will/won't fly in your area, as well as what is possible with the remodel. Take what you learn from them and get rough builder estimates from someone like Jeff. Then add 30% for good measure. By the time you get done with this step, you may find that your dream remodel isn't even possible.

3. Compare. If the net difference is anywhere close, I would recommend moving. The sort of remodel that you are suggesting will be very disruptive, very likely putting you in an apartment for a year. Expect that everything will be more expensive and take longer than estimated. It will be a huge time suck constantly needing to approve change orders and deviations with the builders, tracking progress, trying to keep them heading the right direction, etc.

4. Financing. Make sure you talk to the bank early. Construction loans are typically a 2nd mortgage on your property, at least around here. The rates aren't as good as a 1st mortgage. Again, compare what it would cost to buy a more expensive home vs 1st + 2nd construction loan.

I don't know your neighborhood or housing market, but I would personally lean pretty heavily towards moving.