Renovating Versus Buying New

You've passed that tired old home with the great porch many times over the last year, and recently you've started to wonder about what it would take to buy it and fix it up. A few blocks later you see the model homes for a new development and think about purchasing one of those homes. Deciding between the renovating or buying new is not an easy choice, and one that relies heavily depends on two issues: money and desired location.

Money is the easier of the two issues on which to make a "rational decision," because it can be quantified. To start this phase of decision making, consider the house you could purchase for renovation. Is it a "do-it-yourself" project, or will you need an architect? Find out. Generally architects will meet with you once for free, in order to give you an estimate. This allows you to shop around with several different architects. Begin calculating costs for the work you need to have done. Keep in mind that kitchens and bathrooms tend to be the most expensive rooms to renovate in a home.

Once you have some figures on the cost of renovating, compare them with figures on buying a new home. While comparing the figures gives you some insight into your decision, it is only part of the decision. In addition to the money needed to renovate a home, consider the value of the home. Be sure that the renovation investment can be recouped, should you decide to sell this renovated house sometime in the future. And think about how your "finished" house will fit in with the other homes in the neighborhood. If the project will make your home the biggest, fanciest house in the neighborhood, you may want to reconsider. Your remodeling project could price your home right out of the range of potential buyers who typically purchase in that area. Local real estate agents are a good resource for information on the typical prices of homes in the neighborhood.

The second factor to consider is your desired location. Generally, building a new home is more typical in the suburbs, while renovating houses is more common in a city. Building a new home in a city may be difficult to do, since finding property to build on may be a challenge, and the land will probably be more expensive than the same size land in the suburbs. Zoning restrictions will also govern what you can and can't do in renovating a house. Be sure that you understand these requirements (or that your architect does) before you purchase the house.

Once you have done your research and begin to make your decision, consider both money and desired location. It may be more expensive to renovate a home in the city, but if you prefer the charm and atmosphere of an older home or neighborhood, that may be the right decision for you. Ultimately, as with many decisions of a long-term nature, factors other than cost must be considered.

Sources: P.A. D'Angelo, The Washington Times