Balancing Home Upgrades with Financial Stability: A Family’s Dilemma

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  • #91951 Reply

      Just want to begin this is not a humble brag and I know how fortunate of a situation I am in. I read this page often and looking for opinions. We are 40 yo with two kids 6 and 3. One income family, make 100k (before taxes). House was gifted so no mortgage.

      Property taxes 10k. We have been luckily with current retirement funds. Have the following combining both/lumping with wife.

      IRA 250k, Roth 120k, Roth 100k, 403b 250k, brokerage account 225k emergency 25k. Will have a pension upon retirement in 15-20 years. Right now we are able to fully fundeach Roth each year, and contribute about 15k towards the 403b. We live modestly and do 1-2 small family vacations a year Question is: our house is a 2 bedroom with a finished basement. So kids share room.

      House is relatively small. We are thinking of doing a dormer in unfinished attic. Put three bedrooms upstairs and use main floor beds rooms for play room/office etc. not really interested in just peaking attic. Would cost approx 250-300k based on comparable quotes nearby.

      We have not done plans yet but have friends who are doing something similar. Not only the Initial cost of 300k, but it will increase property tax approx, 5k a year and extra money in heating etc etc. I know as a family we have to be on same page and important for a marriage. For me personally I want to provide a nice home but I’m torn because it’s a lot of money and would severely debilitate us. Would drain the brokerage account and limit what we can further save for retirement.

      Right now we are in a very great position and in 10-15 years the kids will be off to college/life. The basement has a space for a room and one child can go when older, maybe 10 years old. Spouse and I have safety concerns having someone down there sleeping (fire/emergency).

      Not actual danger but just concerns.

      It has an emergency escape window. (Egress).

      Wondering everyone’s feedback.

      #91952 Reply

        Are the kids the same gender or 1 boy and 1 girl? If sane, they can share until they move out.

        If different, then look into converting the basement into a bedroom for one when they would be old enough to safely evacuate if needed – maybe consider adding a door so an adult can access the bedroom if needed.

        #91953 Reply

          ***Nevermind! I saw you wanted dormers.

          That is just unbelievably expensive for what seems like a simple reno.

          It’s not like you’re adding in a full bath and kitchen up there. Just bedrooms.

          Why is is so high?

          #91954 Reply

            I would move to a larger home before doing this renovation. Have you been scrolling for houses for a while to get a sense of what you could buy if you don’t do the renovation? If your current house is work 650K, and you own it outright, it sounds like you’re in a good position to move to a larger home without draining your brokerage account.

            I agree with you re: safety concerns about having a child sleep in the basement. And I do understand wanting to give your kids their own bedrooms.

            I’m saying all of this as a 43 yr old who bought a home way under market and did a major gut renovation on it just last year. Expect a reno to cost way more than the original quote–so many things can come up that you just don’t anticipate at the start.

            Have you seen: Does anyone live purely off of dividends and what are your three non-negotiable rules?

            #91955 Reply

              I can’t answer as I don’t know the neighborhood or what the cost of other houses are.

              I’d be tempted to make the upstairs a master suite with dormer and beautiful bathroom with nice storage in the shallow parts under the roof and just have three bedrooms on the main floor with playroom, family room/ guest room in basement.

              #91956 Reply

                Are you in a HCOL area? That reno number seems high, but I’m in the midwest. If you can afford a house payment, I personally would do a cash out refinance instead of selling my brokerage.

                You don’t currently have a mortgage so you are sitting on a lot of equity.

                #91957 Reply

                  For one child, that is crazy.

                  Make a bedroom in the basement for the oldest and take a nice vacation.

                  #91958 Reply

                    Don’t forget to add a healthy amount over the quote for overages and unforeseen expenses. I would plan AT LEAST 20% over budget.

                    Second thing to consider: does this put you at the top end or over the market in your current neighborhood?

                    If the rest of the house is in good condition, it sounds like this move could make this house work for your family for the next 20+ years. You still have bedrooms on the main floor to age in place. You’ve done well and saved. If this is your number 1 priority, you can do it.

                    #91959 Reply

                      Seems like a lot of extra rooms for essentially one child to have their own room. Can you build out and add a door to the basement for less than $300k?

                      #91960 Reply

                        If it were me, I’d sell the house and buy something bigger with a better floor plan!

                        #91961 Reply

                          I like the basement idea. You can always add a security camera to keep an eye on things. Construction is just so crazy expensive right now and whatever they quote you is never actually the price in the end, and the timeline is like double what they say as well. Your property taxes would probably not increase if you finished the basement.

                          Not sure what your codes are in your area.

                          #91962 Reply

                            I would just sell and move to a bigger house before taking on something like that. Have you looked into that option? Just because you inherited a property does not mean you are bound to the land and building like some serf.

                            Upgrading or renovating older housing has to be the second worst financial decision Americans make after overspending on cars. Oftentimes it creates something that is not justified and does not really fit in the neighborhood, which subtracts from its value. And it all comes down to emotions and the romance of it, along with too much HGTV (and paying attention to what the Jones-friends are doing).

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