Disclosure: Article likely more interesting for home buyers in the $600,000 to $750,000 pricepoint.
My personal home is along the riverside McGregor corridor, a location that is extremely popular that I also love. I paid $315,000 for it 2 years ago for an older 2,600 square foot home, and my family and I have outgrown the house. I recently contemplated putting my home up for sale and buying something modern where my location target is from Whiskey Creek all the way to the Iona submarket. My desired home is 3 Bedrooms + Den, 3 Full Bathrooms, and over 2,800 Square Feet with a pool. Recent MLS inventory searches shows practically nothing under $750,000 which didn't go over well with the wife. With no signs of a market slowdown in the foreseeable future, I thought I would look at my current home and design a total remodel, with adding 500 square feet of additional space.
After reviewing my survey and hiring my architect to draw up my plans I put things on paper to estimate my costs. Features I am adding are an extra bedroom, additional bathrooms, new electric, new plumbing, a pool, new roof, etc. Since my ceiling height currently ranges from 7.5' to 10', I decided I wanted one finished ceiling height at 10' throughout. The finished home would increase to 3,150 square feet. To gut the home down to the studs, raise the ceiling height, and to accomplish my design, it is going to cost around $300,000 which will bring my basis to $615,000 or $195 per square foot. The home would also qualify for all wind credits and be considered pretty much a new house. It would actually significantly reduce the amount of my homeowner insurance by $1,000. At completion, my home will be the dream home I always wanted.
As a real estate guy who understands home values in the area, I estimate my remodeled home would have a value of $265 per square foot, or $834,750. My location is prime. Upon completion, I will have an immediate equity position of around $220,000, not including the 20% cash down payment I used to buy the home originally. While the sentiment of buying a home these days isn't considered the best investment of your life anymore, I sure created a phenomenal investment with equity as security.
As home prices continue to trend upward, I determined that this makes the utmost sense financially, and it keeps me in a location I pretty much refuse to give up.
Fannie Mae currently offers several loan products that allow home buyers to purchase a home where the lender will allow you to borrow the necessary funds to purchase and fully remodel your home as long as it doesn't exceed the future appraised value.
There are plenty of homes on the market in South Fort Myers for under $190 PSF that have the area to make additions and get a smaller, older home to your desired dream home. Like me, you would be able to make your additions and have a Future Appraised Value higher, and in some cases much higher than your basis.
Since Allan Development Group members are also licensed real estate agents under Royal Shell Realty, we are the most qualified experts to show you options and offer ideas with an extensive combined background in real estate transactions and construction.
If you are in the market to buy a new home in the area and are frustrated with lack of inventory and high prices, the perfect opportunity may be going the remodel route. Contact Us today and come into our office for a free, no pressure consultation.