Remodeling an older home (mortgage, loan, new house)

[new to this]

Hello Everyone,

I know this topic has been gone over numerous times. Is it worth it to remodel an older home to where you will have one of the most expensive houses on the block? On average the homes in the area range anywhere between $150k-$200K. With the current renovation budget, the home would be at or close to $200k. Just looking for some feedback as taking out a home renovation loan would raise our monthly payments (mortgage and home renovation loan) to what it would cost for a new construction home mortgage. Of course I know the pros and cons of new construction vs remodeling, but I was wondering if anyone else faced this dilemma and what decision did they make. My fear is, we would remodel the home and it would be worth more than the houses on the block, that if we ever decided to sell we would end up losing money. Thoughts?

Thanks in advance!

[TexasTony]

Only on HGTV shows like Flip or flop I have seen homes with highest comps in the neighborhood after renovation selling in a heartbeat. So my opinion is not to do it. We have had great success in buying cheapest or lowest priced home in the neighborhood of expensive homes. That's the way to do it...

[new to this]

That's a good point! My mom mentioned the same thing in regards to buying the least expensive house in an area surrounded by more expensive homes.

[PinkLadyK]

I don't like new homes. I get the appeal and I like the perks of new homes, but I am an "old bones" gal. So for me, I would say renovate an old home. And lots of people would agree with me. BUT there are at least as many people who would prefer the exact opposite. So I would say go for personal preference.


One thing to consider: unless you build, you are unlikely to find a house that is your dream house, which means you'll either just have to live with the counters/cabinets/floors/tile/etc that is there, or pay to redo it. And renovating is a pain. Especially if you buy the least expensive house -- I doubt it is least expensive AND perfect inside.


But it also depends on the neighborhood. In my neighborhood, there is value to the original house (and restrictions preventing anything that looks too "new" from being built). In some other areas, I'm sure the expectation from buyers is for a brand new house.


Lastly, what are you considering "old house?" While a house built in 2000 may be considered old by some, that isn't a selling point. A house built in 1950? That's something people look for.

[new to this]

Sorry it's "older" but still relatively young. It was built in 1981.

In terms of new construction, yes we would build which would allow us to pick out things that would be what we want but still within our budget.

[PinkLadyK]

As someone who seeks out old homes, a house built in 1981 would not tick that box for me. If the alternative is building and hand-picking everything you want and doing it all for $200,000, I would do that for sure.


Actually, now I'm thinking -- why would you even consider the 1981 home? Sounds like the new home will be newer, more to your taste, and cheaper, and you won't have to live in a construction zone.

[new to this]

Good point!

The new construction would cost anywhere between $200k - $260. So it will be more, but like you said it would be newer and to our taste.

The reason why I'm entertaining the thought of remodeling is because my wife suggested it, so I'm trying to gather more information on the matter before we come to a decision.

[TexasTony]

Originally Posted by new to this

That's a good point! My mom mentioned the same thing in regards to buying the least expensive house in an area surrounded by more expensive homes.

So now you know what majority of the buyers including your mom prefers. So the moment you make your home the most expensive home in the block you would filter off majority of the home buyers. Now why would you do that. Only if you plan on living there forever.

[KathrynAragon]

Don't do it unless you're going to live there a long time.

That's my story and I'm sticking to it. It rarely makes good financial sense to be the most expensive house in the area.

Put your money into a home whose value is bolstered by the homes around it, not downgraded by the home around it.

[gwarnecke]

Financially, it's usually best to find a house that has already received a high-quality renovation (including infrastructure updates as needed - plumbing, electrical, HVAC, foundation, etc) that you can live with. Virtually no home renovation projects increase a home's value more than they cost.