Originally Posted by namtrak
We moved to Albury, on a small part for work, but largely for family. A large part of SWMBO's family lives in and around Albury and Tallangatta, and once we had kids the choice was to get them near cousins etc.
When we first moved we tried to sell the house, but had no luck at all - so we rented it out. Which was great for the tax benefits and income, however whilst the tenants were all fine the house degrades without the attention of an owner. We finally decided to sell it when the cost of maintaining the house up North became too much and the cost of the potential bank loans was going to be too high.
Well, because when we first got here we were very cash strapped - we had the mortgage up North, the only place we could buy was a small, double brick house near town for $88,000. However like most people, we benefitted from the increase in property values through the early 2000's. As such, rather than sell up and buy another house further from the centre of town we felt it wiser to improve the house we were in. Besides we like the neighbourhood.
The cost of the renos (not including labour) is around $900 per sqm or $7000 per square. Not including the labour component, which will add another 30-40%. This is not an unreasonable price, especially given the size of the addition is fairly large.
We definitely consider the cost of the addition to the original cost as part of the whole picture. All things being equal, once the reno is complete we will have spent $88,000 plus about $25,000 plus say $110,000 ($223,000) on the house to end up with a 4 bedroom house, with ducted heating and cooling, ensuite and new kitchen. Our end mortgage will be around $100,000. And the property will be worth between $350,000 and $400,000. All this in a double brick house in a quiet street, 3 blocks from the main street of Albury.
If we were to sell up now, and buy a new house in the 'burbs, we believe we would have to service a mortgage closer to $200,000 to $250,000. Which isn't really progress as far as we are concerned. I think, for us progress would be a decent house on a few acres with no mortgage - which will probably be our next step - when the time is right.
Well that's the $64,000 question isn't it!!! How to increase your property's equity without increasing your debt. There's a myriad of TV shows, magazines, books, hardware stores etc making millions and millions of dollars whilst people try to answer that question. At this point I should point that what we are doing works for us, and may not be relevant to the next person. One thing we did do, which gave us some clarity was to write out every option we had and the fiscal ramifications of each option and then we progressed from there. Figuring out the Dollars was easy, it's lifestyle choices that complicate things.
Cheers