Property Q&A in Cumberland>Question Details

Linuxos77, Other/Just Looking in Rhode Island

To build an addition or not to build an addition.....

Asked by Linuxos77, Rhode Island Sun Jul 25, 2010

We bought our current 2 bed/1bath 1100 sqft ranch in RI for $279k at peak of market and owe about $230k. After 7 months on market we only got $180k offer, everyone else said it was too small. We also cant compete with forclosures/shortsales. We have 2nd child on way and current bdrms are smaller (plus will have a boy and a girl). If not for the space we'd stay here another 5 years easy. We can add new bdrm for $28k and make house work for us for forseeable future, but is it big mistake to put money into this place? We also cant see spending 40-50k (to cover mortgage/realtor fee) just to sell, then drop another 40k towards new place (that's major chunk of savings). We're financially sounds and have no risk of losing the place so short sale is not option, plus we'd hate to take the credit hit. So, what is best option? Would we recoup cost of addition going from 2 bdrm to 3bdrm. Hope is to enjoy the house until the market improves. But it will only work for us with more space.

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Well the $28k was for a 12x12 foot bedroom so that's about $198/sqft.... Is that too off the mark to make it worth it? The addition would fit in decently (though not perfectly) with the existing floor plan.
0 votes Thank Flag Link Mon Jul 26, 2010
Here's how to think about it.

You know the home is worth 163/Sq foot. If you can add on for less than that, you are probably building equity, and thus, it makes sense financially. (A 200 sq foot bedroom (roughly 14x14) is $140 a square foot. So that's positive. But also consider: Will you be creating a home that looks like a three bedroom? Or will it always look like a two bedroom with an extra room? Flow, floorplan are important considerations. If the answer is the former, I would probably do it, and do it now. You'll be making 3-5% in the coming years on the total equity in the house, so the more space you have, the better it'll be. Plus, you like it their and the expansion is equity neutral.
0 votes Thank Flag Link Mon Jul 26, 2010
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