Even though interest rates are up about a quarter of a percent, the housing market remains strong (maybe because interest rates are going up – folks want to make a move before rates go higher). Basically, with the same monthly payment, a quarter point rise in rates reduces the amount of loan you can get by about three percent.
If you don’t want to move, but you need a little more space, you have a few choices. Do you want to bring aging parents closer, move a rambunctious teenager further away, or escape the chaos in favor of a quiet workspace? Even if your property is zoned for a single-family residence, you can definitely get more square footage.
The first option is a separate structure that can be used as a living space. Although you probably won’t recoup the whole cost of building the second structure, having one usually increases the value of your property. The good thing about an additional structure is that they allow aging parents to live close to you but not with you. They also allow your teenager’s garage band to practice under a separate roof (possibly worth the cost of construction right there).
There are legal limits to the size of the structure and where it can be placed on your property. Before you build, I recommend considering the other possible uses for that space (e.g., a vegetable garden, a pool, a dog run, a chicken coop) to be sure the structure will work for the long term. You should call the Building/Planning Department at the city or county for advice on the permitting process.
One final vote in favor of a second structure is that it requires new construction. Anyone who has done renovation work will tell you how much easier new construction is compared to dealing with an existing structure. Far fewer surprises can also mean far fewer expenses.
An alternative to a separate structure is a garage conversion. Be aware that in all likelihood, converting your garage into a living space will add no value to your home, and may actually decrease the value because you won’t have covered or enclosed parking. If you choose to sell your home, it may be cost-effective to convert the space back into a garage, since most folks don’t like carrying groceries through the rain. However, if you need the space, you need the space – just be aware of the financial impact.
Maybe the best of both worlds is an attic conversion. The conversion costs less than building a separate structure per square foot, and unlike a garage conversion, you don’t diminish the value of your property. The down side, of course, is that you cannot ask junior to take his new drum set to the structure on the far side of your property next to your soon-to-be angry neighbor.
One final option is a room addition. It is less expensive than a separate structure because it shares a roof and foundation with your existing home, but it is likely more expensive than a garage or attic conversion. Attic conversions can be particularly tricky because that’s where pipes for gas, water, heat, and air conditioning are – as well as electrical wiring. This can cause all kinds of unpleasant surprises during the construction phase.
No matter which route you go you will need a building permit from the city or county. Don’t forget this phase because it will be a disclosure you will need to make when you, or your children after you, ultimately sell the property.
Next time I’ll write about the top five reasons Californians are buying homes. If there’s something you would like me to write about or if you have questions about real estate or property management, feel free to contact me at firstname.lastname@example.org or visit our website at www.realtyworldselzer.com. Dick Selzer is a real estate broker who has been in the business for more than 35 years.