You may be wondering – Was the Attic Renovation worth it?

In case you missed the post earlier this week about our attic renovation, I detailed how all of the work and supplies totaled just about $14,000.  Anyone knowledgeable in real estate or home values will rightly ask – did we increase our home’s value enough to make the project worth it?  As with most home improvement projects (unless you are skilled and do the labor yourself), probably not.  But this was still a frugal decision… and I will explain why.

Here were the alternatives:

• Moving (expensive)
• Continuing to have our office in the dining room (unacceptable living conditions)

Like I mentioned in an earlier post, we were SERIOUS about moving.  Our house was on the market, and we had found another home.  But something didn’t quite feel right, and we decided to stay put.  We spent the next several months going back and forth between moving, finishing the attic, or doing nothing.  But once baby Abby was born and I decided to leave my job, it was clear that doing nothing was not an option.

So we considered the cost of moving:

• Commission: Even if we moved into a larger home that was affordable, there are huge costs associated with moving.  Right off the bat, you pay 6-7% in commission on the sale of your home.  In our case, I estimate that we would have been able to get $105,000 for our house if we sold it, which would be a minimum fee of $6,300 in commissions paid.
• Closing Costs: Whenever you buy a new home, there are closing costs.  These include attorney fees, title insurance, document prep fees, and prefunding an escrow account.  These would have been totaled at least $3,000 in our case, and perhaps more depending on the price of the newer home and associated property taxes.
• Small Fixes on Current House: Have you prepared a house for sale before?  If you have, you’d know that all those little jobs you’ve been putting off will have to be completed in a compressed timeframe.  Professionally cleaning the carpet, repairing trim on the porch, repairing lots of little things around the house, LOTS of painting, de-cluttering, etc.  In our case, materials for all of these little projects would have cost about $1,000.
• Movers/Moving Truck: Unless you own a giant van, you will be renting a truck.  And if you are not in a position to do the heavy lifting yourself, or don’t have many friends/family around to help, you might need to hire movers.  In our case, a large moving van for use around town would be about $250, or at least it was last time we used one.  If you hire movers, it will be MUCH more.
• Small fixes on New House: Was every wall color perfect in the new house?  Were all the window treatments your preferred style?  Did any appliances need to be replaced?  Most people desire to put their own personal touch on their new home, and that costs money.  In our case, we would have easily spend a minimum of $500 if we bought a home in great shape (and that would only cover paint and maybe some curtains).  Need to replace an appliance?  You can double or triple that number.
• Intangible Costs: The whole process of moving isn’t exactly fun.  It isn’t fun to keep the house looking showroom perfect for a month or two, it isn’t fun to pack up EVERYTHING in the house, and it isn’t fun to unpack.  The last time we moved, we had 2 children, and it was a ton of work.  This time around, we have 4 children… and at ages 8, 4, 3 and 9 months, they aren’t exactly helpful with most household tasks.
• New House Payments: I don’t have any stats to back up this claim, but I am willing to bet that 90%+ of people who move end up with a higher mortgage payment in their new home compared to their old home.  Most people move because they need a home that is bigger, nicer and/or in a better neighborhood etc.  These things all point to a more expensive house and a bigger monthly payment.  I know this would have been true in our case.

With the possible exception of small fixes to your current house, all of the above costs are “money-out-the-door”, meaning they are not investments in the property that you might recoup a portion of at the time of sale.  Adding all of this up, it would have cost over $10,000 plus hours and hours of work to move, compared with the $14,000 it cost to finish our attic.

Those were really our only 2 options; whether through cash, using equity in the house, or financing, we were going to have to shell out at least $10,000 to make our living situation work for our family.  With the renovation of the attic, if we increased the value of our home by more than $4,000, then it actually ends up being the better deal.  And we have good reason to think that we did okay, attic renovations are considered to be one of the better home investments in terms of recouping your investment:

Source: Remodeling Magazing 2014 Cost vs. Value report

My first thought on the stats above are: our $14k cost looks pretty good compared to an average cost of $48k!  My second thought is: we might have increased the value of our home by $10-$12k.  But who knows… and we might not ever know.  It depends on if we decide to put our house on the market anytime soon… but since the goal of the renovation in the first place was NOT to move, we don’t plan on finding out our home’s market value.

So was the renovation worth it?  Absolutely.

Have you ever renovated to save money so you didn’t have to move? We would love to hear your store!