Golden Rules of Remodeling
This addition project was on a small 1907 home involving a new sunroom, half-bathroom and kitchen expansion. During the planning stages, we focused on three basic rules on "spending, blending and overextending" intended to help make good investment decisions.
- Let Reality Govern Spending: Use the existing size and value of the house compared to the rest of the neighborhood to help determine how much to spend on the project.
- Focus on Blending Old and New: Find ways to give the addition the same look and feel as the existing house, while using modern materials and observing modern zoning regulations and building codes.
- Avoid the Pitfalls of Over-Extending: Determine which parts of the job you can sensibly do yourself and which should be subcontracted to professionals.
We'll go through each of those rules in detail, along with the floor plan and financial notes as you scroll through this page.
Let Reality Govern Spending
Any remodeling project should start with an examination of the value of the improvements (which is not the same as the cost of the construction), and a realistic look at the financial wisdom (or folly!) of the project.
This home's in a modest residential area of Minneapolis. It was small (900 sq. ft.) compared to most of the other houses on the block, and it had never had any significant improvements made to it, so the basic floor plan was the same as when it was built in 1907. A realtor friend of ours estimated that it was worth around $79,000 before our construction.
Besides adding about 250 sq. ft. of floor space, we're making three crucial changes to the house that will really improve it's value:
- Adding a half-bathroom to the main floor (the house has only one bathroom now on the second floor)
- Totally updating and expanding the kitchen (which was last remodeled in the 1950s)
- Creating a brand new room with a fireplace
Our real estate agent helped us get a feel for what the house would be worth when we finished. He found some comparable homes in the neighborhood that ranged from $106,000 to $117,000. So we conservatively estimated that we could safely spend about $30,000 to $40,000 on the addition and make back the money if/when the house is sold.
However, your banker can't accept this sort of informal calculation. If you want to borrow money against the future value of the house, your financial institution will probably insist on a complete certified appraisal of the house, projecting forward to the completion of the construction.
The '96 project is a good example of a basic principle of real estate investment: It's always better to start with a house that's priced low compared to other houses in the neighborhood. Otherwise, you may never recover the costs.
Focus on Blending Old & New
We knew we could build the addition for less than our target price, but having that target allowed us to decide how authentic we could afford to be in duplicating the materials and design features of the existing house. Almost every step of construction required us to make some hard choices about matching materials.
Siding was the first big decision. The original siding was a 3-1/2" cedar lap siding. But somewhere along the way the cedar was covered with a hard asbestos shingle. We considered three options:
Removing all the asbestos from the WHOLE house (fairly expensive), refinishing the old lap siding underneath and installing new siding on the addition to match the old siding.
Residing the whole house with vinyl or aluminum.
Finding a modern product matching the existing siding to cover the the new construction.
We chose the third option, which turned out to be the least expensive. And the new fiber-cement siding matched the old siding.
We chose custom, made-to-order windows for the addition so they matched the size and trim details of the existing windows.
We used several different materials to match the look of the extensive solid oak wood trim in the existing house. To mimic the solid 1x6s that were used for the baseboards, we ripped pieces of oak plywood down to a width of 5-1/2", and used an authentic solid oak cap piece to hide the top edge of the plywood.
We found a product that has oak veneer on three sides for the window and door casing. And we were forced to buy solid oak for some of the more ornate pieces, assuming we can still find something comparable.
The main floor of the house has 9' ceilings, so we matched that in the addition.
The existing oak floors in the house were originally 3/4" thick. But they have been refinished so many times that they're closer to 1/2" thick now. So to seamlessly join new flooring with old flooring, we planed down the new oak to the same thickness as the older hardwood.
Avoid the Pitfalls of Overextending
There is probably no part of this job that couldn't be done by an determined amateur. Most building departments allow homeowners to do almost any sort of work themselves, without being licensed for a particular trade. Homeowners must, however, actually live in the home, obtain the necessary building permits, and follow all the appropriate building codes.
But all do-it-yourselfers must make sensible choices about what to do themselves, and what to hire out. We generally do all our own carpentry, including rough framing, windows, roofing, siding, cabinet installation, and wood trim.
We almost always leave foundations and heating/cooling systems to licensed subcontractors. Depending on the complexity of the job, we often hire plumbers, electricians and tile setters to advise us, or to do part of the work themselves. And if we're in a hurry, we may hire a drywall taper to do the very time-consuming and delicate work of mudding and taping drywall joints.
Remember that a pro will usually complete the job a lot faster than you, so be sure to weigh the costs of extending the project's length by doing the work yourself against the costs of hiring a pro.
Planning The '96 Addition
On past shows, we've worked with architects who created new plans for us, and we've worked with draftspeople who put our ideas and sketches into recognizable plan form.
On this project, we worked with a home designer -- a designation falling between the architect and the draftsperson; bringing more design input to the process than a draftsperson but not certified as an architect so the cost is lower than hiring an architect.
We started working with our home designer, Brad Johnson, long before construction began, meeting at the house to get accurate measurements and meeting at his office to discuss styles, shapes and to go over drafts.
By the end of the process, we had a plan that helped us get all the necessary permits and material estimates we needed.
The financing for the Addition '96 project, was basically re-financed to pay off the old mortgage and pay for the costs of the addition. It was based on the appraised value of the home with the addition.
A home equity loan was another option, which is based on a percentage (usually 80%) of the home's "equity," the final appraised value of the home (including the addition) minus the amount of the existing mortgage.
In either case, the key factors are to have a realistic view of what the home will be worth after the addition, forecast a budget based on that value, and then make sure all the work is done at the projected costs.
There's a certain risk involved, so any lending institution will go over your proposal carefully and build in certain safeguards, especially if you're contracting the project yourself or doing the work yourself.
As for which type of loan will be best in a given situation, it usually boils down to two rules of thumb based on current interest rates:
NOTE: If current interest rates are higher than the rate you're paying on the existing mortgage, it usually makes sense to go with a home equity loan (preserving that low rate on the existing loan).
If current interest rates are lower than the rate on your existing mortgage, it makes more sense to re-finance the whole amount and pay it all off at that lower rate.