A home remodel may be the perfect option to rejuvenate and modernize your house. On the other hand, tearing it down and putting a custom built home up in its place can give you complete control, such as the option to choose features you do want and do away with those aspects you do not. When you focus on each deciding factor individually, the solution might become more clear.
Upfront Costs—Solution: Remodel
How much is this going to cost in terms of out-of-pocket expenses? From that perspective, a home remodel is generally going to be less expensive than a custom built home. It is not practical to extend beyond your means, so remodeling just may make the most sense. There is a caveat here. An extensive renovation—such as a top-to-bottom remodel—can actually be more expensive than a custom build and is generally only recommended for certain situations, such as preserving historical value.
Return on Investment—Solution: Custom Build
Lower initial expenses do not necessarily result in more long-term value. In fact, a custom built home is more likely to result in a better ROI, and this is even truer the older the home is. After all, a 25-year-old remodeled home is still 25 years old, and that will influence value. A new home, on the other hand, offers considerably more value in the near-term.
Design Options—Solution: Custom Build
While a major home remodel certainly offers you many design options, the scope simply cannot compare to the creative freedom that comes with designing a house from scratch. Opting for particular conveniences and functionality and doing away with aspects you do not want is much easier when you are not limited by the existing structure and perhaps even its footprint.
Red Tape—Solution: Remodel
So, what kind of red tape will you face when remodeling or rebuilding? Zoning laws for one, and you’ll need building permits, which an established contractor can help you acquire. Another potential hurdle is a homeowner association. Remodels often do not require permission, or it is relatively easy to acquire, but home additions and new construction can have much more involved requirements.
Existing Damage—Solution: Custom Build
Something else to consider is the current condition of the home. If you are remodeling after a flood, for instance, and there is significant water damage, then a custom build may be more practical. It really depends on how much can be recovered and how much needs to be replaced because there soon comes a point where repairing and renovating just is not the more affordable option.
Mortgage and Property Taxes—Solution: Remodel
What kind of mortgage can you afford? A custom home will certainly have a bigger mortgage. A remodeled home can stay the same, but even if you have to roll a home improvement loan into it, it should be cheaper. Another issue is property taxes. Many locales have protections in place to limit property taxes based on purchase price, but that protection does not apply if you rebuild.