Renovation math and rationalizing

One final rationalization

Besides a home and maybe a fine art collection, I can't think of many other big purchases that are such a mix of investment and emotion. Herein lies the problem for an indecisive over-thinker like me. Time to dive into fuzzy math and rationalizations until decision equilibrium is reached or no one will speak to me anymore or both. (I think there are some guys I worked with at a dot-com start-up who still may not have recovered from a car purchase I made in 1998.)

Some explanation.....

Maybe these floor plans help clarify why it has been so hard for us to figure out what to do with this house. Neither of the below plans is all that accurate but they're all I have right now. The existing plan on the left is from our mortgage documents and is just meant to show the outline of the structure. Because it's missing walls you can't see how cut up the rooms are and doesn't include the front porch or decks. The new plan on the right has already been altered- see purple for now, and doesn't extend to show the living room or family room.

Floor plan from mortgage "before"

So what is really tempting is to square off the missing chunk of house. If we did a large 3 story renovation and "squared off" the existing floor plan we'd have about 300-400 extra square feet on each level, for another approximately 900 square feet (although some of it would be basement space). As it is, we're adding about 80 square feet, maybe even less. The difference in cost is about 3-4 fold. Perhaps this explains the tortuous math a bit. If we could triple our budget we would get 10 times the new footage. Additionally we could create a basement apartment and actually reduce our costs. This math makes me kind of sick to my stomach. I think pretty hard before spending several hundred dollars (except for the case of groceries). One time I bought a 12 pack of coconut flakes instead of a single pack to save something like 50c. per pack. I'm not a complete cheapskate but I do like to make smart decisions and neither of us is managing a hedge fund. Well we can't triple our budget. So here we are spending 1/3 the money and getting 1/10th the space. This is not good.

Tentative "after"
only shows dining room, kitchen
and stairs from old plan

After completing this math and causing four days of insomnia I had to have my contractor come back and talk me through this.

I asked if we doubled our budget and put in a basement apartment, what else would we get. Not a ton. Most of what would be left after excavation would end up being /stairs/hallway/reconfiguring roof lines. Because of the proximity of our neighbors we can't get any equipment back there. All digging would be done by hand with shovels, and cement would be walked back in wheelbarrows. Perhaps I should call an Amish crew! But over the course of our discussions he framed things a bit differently, and in a way that made me much more comfortable. He formulated a different equation. He suggested that if you look at budget versus needs met then the below plan is an excellent balance. It affords us basically 100% of our stated needs. We get a new front entrance, a new kitchen, a new mudroom, a much more modern, flowing, open home. It meets all the needs I laid out as important to me. Do I need a 4th bedroom, a large home office, an additional 300 square feet of glorified hallway space connecting all these odd levels and indentations? Not really.  And as my neighbor asked, "Do I want to live through seasons of construction, rather than weeks?" No. Do I want to get as much ROI as possible for every dollar spent? Of course, but we all have budgets and we need to live someplace.

So I am now comfortable that we are doing the "right" thing financially, at least for us. We will end up with a house that is fully functioning and that we can afford, with or without a renter. It will be flowing (enough) and new and beautiful.

Would I like my house to be bringing me income? Yes, but my contractor suggested that down the line we could reconfigure the existing basement storage areas to be an apartment, if we really felt selling it as an income or nanny suite would raise value. I don't see us doing that but it is possible.

OK. Decision (re)made. Breathe.