It is probably less expensive to move than to add on a second story addition.

Contact a local architect. A structural engineer will want to know what you want to build. An architect will be able to work with you to design a solution that meets your needs, is structurally sound, and is aesthetically pleasing.

To answer your question we would really need to know more about where you are and exactly what you are talking about. A roof off remodel is probably the most expensive and is almost certainly a bad investment. Unless there is something super special about your house it just doesn't make financial sense. In most areas you could double the size of your house and spend less money by buying a new home.

If you are talking about an attic conversion, they can be quite economical, as can adding a shed dormer, in certain situations. It really depends on what is there now.

Some architects will be able to evaluate the structural integrity of the existing structure. (I didn't take all those structural classes for nothing)

Once you add up your total costs--including moving out, renting elsewhere and moving back--you may find it more economical to simply move to a bigger home.

worthy work

The exception could be if you're in a rapidly gentrifying community. And even in that case, Mr. Komatsu is always an option.

Sometimes it is not known if Mr. Komatsu is the best route to take until the paint is dry in the new addition.

Thank you, everyone! In the short term, we would spend less money if we just moved. But in the long term, we would be able to build a lot more personal wealth if we did an addition and stayed put for 5-7 more years. The market is a seller's market right now where I am (Tennessee), which means we could sell our current home for a great price, but we'd be paying premium for a bigger, nicer home. We'd also have to switch from a 15-year mortgage with a 2.6% rate to a 30-year with a 3.7%. All the estimates I see online ballpark a second story addition to be around $100K. We want a playroom, bedroom and 3/4 bath. I guess I'm wondering if that rough estimate includes any foundational strengthening, and if that's a reasonable estimate

I‘m also in the TN market. 100K would be very low. Builder basic. Bouncy floors with carpet and a fiberglass tub shower. Realistically start at double that for what’s in most people’s heads. Plus the 9 months of move out and the inevitable damage to the first floor that will have to be redone as well. A teardown or moving is usually the much better option. Unless the lot or location is not reproducible, or you live in a Nashville rapidly gentrifying urban location, the home itself is not something that it would make sense putting in that type of effort to alter. Remodels are stressful. It’s a losing night at the poker table without ready plain fare back home.

You've received good advice ^*^ above. If you are convinced to proceed, here are some critical issues to investigate and resolve before proceeding (in no particular order):

--Will the existing foundation support a second story load?

--what are the local jurisdiction's zoning and approval requirements, costs, required submit talks and approval procedures and timeframes?

--If a mortgage is involved, what are their requirements? Will they finance the addition?

--Where will the new HVAC be located and how will the ducts be run?

--Will the existing electrical service have enough capacity for the new addition?

--Wouldn't it be prudent to have a full bath in the addition?

An experienced architect should be able to advise on all these and identify one or more concepts to discuss with an experienced general contractor for budgetInge purpose.

Good luck!

"All the estimates I see online ballpark a second story addition to be around $100K."

All of which means nothing until you have plans drawn and get local pricing. Google is not going to build your addition.

I have designed a second story addition on a house such as yours. The house was on a large lot and in an area of more expensive homes so the owner thought it was worth it. They didn't move out during construction. It depends what you and your family can put up with. I would get an architect involved for preliminary design, bounce the design off of a contractor with renovation experience for ballpark cost, then decide whether to proceed or not.

--If a mortgage is involved, what are their requirements? Will they finance the addition?

The lender may very well say no!

And you may not be able to proceed without their approval. In our jurisdiction, for example, the mortgagee must provide its approval before a zoning variance or building permit will be issued.

I hadn't thought about the mortgage lender needing to give approval. thanks for all the advice, everyone! if we decide to go forward or talk to contractors etc, I'll update here for anyone else with my same questions.

In the short term, we would spend less money if we just moved. But in the long term, we would be able to build a lot more personal wealth if we did an addition and stayed put for 5-7 more years. The market is a seller's market right now where I am (Tennessee), which means we could sell our current home for a great price, but we'd be paying premium for a bigger, nicer home.

How does that math work?

If you can save money by moving, which you probably can, then moving will generate more wealth. Are you saying that your house is going to appreciate much faster than the nearby larger homes and thus staying for the growth is a good idea? I am surprised that your house will grow faster than a comparable larger home, and even more surprised that the growth is significant enough to close the financial gap between the two.

I am seeing 15 year rates at 3.0%, so why do you have to go to 30 years? If you have the money to do/finance the addition then that same money could buy/finance a new home.

----

I am fairly familiar with Tennessee, and I would be absolutely amazed if you could do a roof off remodel in Tennessee without extensive damage to the existing interior. I mean the roof keeps the sky water out... and let's get real, in Tennessee the only weather prediction device with better than 70% accuracy is a weather rock.

To me, it looks like a modest home - doesn't have a garage. You will never recover your investment.

Perhaps our math is getting too complex for our own good, but here's our reasoning. You all are welcome to poke holes.

First off: we love our current location. We can walk to our church, we can walk to a park. We're within minutes of everything. And it's a neighborhood that is rapidly gaining value. Homes that are smaller than our current house have sold for $240K. We bought when the market was super depressed and got our home for $152K. We've done improvements and are about $185K all total invested right now.

Our end goal is to buy a plot of land and build. We aren't in a position to do that right now, but at the same time it is absolutely necessary that we have more space. That said, we want to put ourselves in the best position to build ASAP, preferably in 5-7 years (before our kids are grown).

All of this depends on whether the extra space can be gained by spending about $100K.

We aren't expecting to get our total investment back out. If we can break even, though, we would get to stay in the location we loved and build a custom home in 5-7 years.

A bit more info on the addition that we want. We don't want to rip off the entire roof. It would be enough to tear down the backside of half our roof, extend the roof peak up about 4 feet, then basically build a giant shed dormer on the back of our house. We already have a flat roof, first-story addition on the back of our house. So we're basically expanding our attic space to cover the backyard addition, and enclosing other attic space. I'm fine with carpet flooring. I'm fine with a fiberglass shower and ceramic tile. I can even do the tiling myself. I'm trying to convince my husband to learn and do the drywall.

Here's our math:

Costs to move include:

$10K closing costs on a $400K house

Realtor fees when selling: $12,600

Interest on a 15 year mortgage for a $400K house during first 7 years: $54,801

Increased property tax for $400K house (for first 7 years): $20K

Total: $97,401

Costs to expand include:

HELOC interest (10 yr): $19,678

Property tax post re-assessment (for 7 years): $12,600

Mortgage interest left on current home (7 years left on mortgage): $9,500

6-mo rent for moving out during reno: $12,000

Total: $53,778

Resale value in a worst-case scenario: $250K

So, after a $100K investment, we would be $285K invested into the house. We would lose about $40K off the investment, if that's the only thing we were considering. But looking at it with all the other numbers, we also save about $40K by staying and doing a major addition.

This might just be too risky and too close. But we're considering

If you've read this far, we're basically best friends, and you're invited to Thanksgiving. Thanks for all the advice and input.

Just flip a coin: Heads you expand, tails you don't move.

(yes you read that right)

The market is a seller's market right now where I am (Tennessee),

Are you, by chance, in the Crieve Hall area of Nashville? This house looks familiar and our family lives in the area (DH and I lived there 18 years ago :) ).

If this is your area, we have some good friends that are contractors in Nashville and I can give you their info. They could better tell you if your budget is doable or not. Based on what I know and how much we spent on our interior remodel (2013) and exterior remodel (2018) in Franklin, TN, I'd say $100K is very low.

I am struggling with your math here and suspect you are making a few of the common mistakes. You are trying to compare numbers without holding anything constant and you are ending up with results that skew towards the lower mortgage, but that is not correct.

If you are going to do it that way, then you need to move to a differential cost NPV calculator, with a fairly low required rate.

In your case you are talking about a $210,000 house plus a $100,000 addition versus a $400,000 house. When you give one property a $90,000 financing advantage it is going to appear to have lower costs, and it possibly could, but you have to consider the difference in selling price when you sell the houses.

I would personally suggest finding an NPV calculator and running the numbers as cash flows rather than costs. You want the NPV of buying a bigger house vs. expanding. So you want the marginal cost of buying a bigger house.

Thus you want to net your differences each year and enter it into the calculator.

So for example, you want your monthly amount to be your new house payment including taxes and insurance - current monthly payment + HELOC payment + increase in monthly taxes and insurance = marginal cash outflow. You will enter that for the first seven years. Then the likely net from selling your $400,000 home in seven years - likely net from selling your current house in seven years = marginal cash inflow. Plug it into the NPV calculator and get a value.

NPV calculator! Thanks! I'll check the numbers that way too.

Not in Nashville! Home values aren't going quite as crazy over here as they are in Nashville.

I hope you are staying safe there today...

I would note, that if your house is worth $210,000 today (12,600/6%) and it will be worth $250,000 after spending $106,000 to renovate it, your loss is $66,000 and not $40,000. The appreciation you already have exists now without the addition.

NPV calculator! Thanks!

I prefer the one on Calculator Soup or in Excel, but I was bored today (actually caught up for once)... I assumed a 2% market growth rate for home prices, but still get positive NPV's at 1% growth. I also assumed you would get a $50,000 bump on the remodel and that the addition would also continue to appreciate at the market rate (which I think is generous).

ETA: This is the NPV of selling your home and buying a $400,000 home. In NPV any positive is considered good.

It doesn't look to me like a dormer is possible for you to get the minimum of 6'9" of ceiling height that is needed to count as square footage in an appraisal or you'll be spending a 100K and it won't count as square footage.

You'd need to put full height walls and a new roof on to add the 650 sq ft. Also unless you do the addition over a larger area your house will end up loosing some curb-appeal. I don't think you need to do it over the full lower floor, but certainly from front to back and it would need to be a decent size to be proportionate so it looks right. That is a small thing sticking up on a part of the house will not improve selling it later no matter how much square footage has been added since people also care about how it looks so consider resale before investing anything for this project.

What is your plan to use the upstairs space for? I guess what are you trying to accomplish and have in that 650 sq ft space? Is there any other options of adding it onto the actual house at the first level? Is what you're trying to do going to make it more attractive to a buyer or is it going to make them go - that is odd and why would you do that, and especially when you compare to what is done surrounding your house. Also will you be the largest house in the neighborhood if you do the addition? Being the largest is never a good thing.

Thanks, @bry911! I took a screenshot of that Excel and saved it. Doing the big addition is sounding risky. I'm getting a couple contractors to come take a look at structural stuff and our space to see if they can give us a ballpark idea of what we'd have to spend. I think the contractors would have to be very confident they could keep the project under budget to make us go for it. At the same time, it's a really tough market to buy in. Most homes have gone up by 10's of thousands of dollars in just the last 2 years; so if we buy now, we basically know that we're overpaying. If the market takes a downturn, or even settles a little, it will be hard to sell for a much higher price down the road (just because things seem to be so inflated right now).

@lyfia There are lots of homes in our neighborhood that have a second story addition on the back. And we have several homes that are 600 sq. ft. bigger than ours. They aren't on our street, but there are several on the street behind us. Unfortunately, not many of them have been on the market recently so we don't have many comps. One home with a second story recently sold for $300K, but it had a 2-car garage and large workshop. Although the actual house was small, with only one small living room and 2 standard baths. After our remodel, if our budget worked, we would have a lot more and a lot nicer space inside.

Also, I've done rough designs of the addition, and we'd have to rebuild the back half of our roof to get the floor space, but it's there. Once again, waiting on estimates.

@bry911 So, I'm trying to figure out the NPV calculation you did...Is the marginal NPV chart showing a positive for staying a remodeling, or moving? Sorry if that's a dumb question, heh.

It is the NPV for moving rather than staying and remodeling. It is often called a marginal NPV.

Please note. Any model is only as good as its assumptions and mine is no exception to that. Look up top and see if you think any of my numbers are off by significant amounts. For example, I have your current loan balance at $62,000, if you owe $100,000 it will change the NPV. Since you are quoting a 3.68% HELOC payment, I assumed good credit and a good 15 year loan on the new property.

Feel free to post or message me real numbers and I will post or message any changes.

From the base of the attic joist to the ridge of the roof how much space do you have?

From the base of the attic joist to the ridge of the roof how much space do you have?

I believe the OP is discussing extending roof, thereby increasing the peak. So it will become a gable roof with an offset peak and shed dormer. I suspect that it would be cheaper and easier to simply rebuild the roof but that is a call for someone else.

Yes, the attic is too short. The contractors will be able to tell what is easiest to do get the height we'd need for the second story.

Hello, anyone who is following this thread. We heard back from a skilled, reputable builder. His quote for a 500 sq. ft. second story addition DID come in around $100K! We talked to another skilled, reputable builder, he also said the addition could be done for around $100K - $115K.

We live in Memphis, TN where costs are perhaps lower than in other parts of the country. The addition would have included a bedroom, a full bath and a playroom; five windows, five doors and a shed dormer.

We decided not to do the addition after all, though. We aren't sure if our neighborhood could quite hold such a large investment. It comes close to being an ok investment, but it's a little too close for comfort.

For anyone else considering this, here are some things I learned when talking to builders. If you can, check floor joists in your attic. They need to be at least 2'x8's and placed every 16". Check your foundation: are there lots of cracks in the concrete? How tall is the concrete section of your house's concrete foundation (called the footing)? The builders we talked to both said our foundation looked great - no cracks. Also, crawl space foundation makes their work a lot easier. If extra support is needed under the house, they can crawl underneath and place beams or columns without having to jackhammer your floors.

I’m in the Memphis area, and am very familiar with the market and the contractors in this market. I would be interested in the contractors that quoted you that price. The ones that I’ve worked with for years would be at least 50K higher. Did you check the state database for license info? Etc. Who did the design work for you to be able to get quotes? Collierville, Germantown, or Lakeland would be the only 3 suburbs that I’d spin the roulette wheel to do a project like that. Even there, the tear downs bring better returns.

@User Not sure what to tell you. I'm just repeating what they talked through with me. River Tree Homes and Bennett Construction were the builders. They're both on Houzz. You can look at their work. Of course these were initial estimates without structural engineers or HVAC guys and others coming to give specific costs. The River Tree Homes guy seemed to imply the cost could be higher because he couldn't see the ceiling joists where part of the addition would be. Maybe he meant $50K higher.

I did the design work myself, floor plans, sketches etc. They would have needed to do professional drawings, of course. But we talked through my plans extensively.

With your familiarity of the market, wouldn't you say a 2nd story addition on a small home in High Point Terrace would bring a huge return? Homes there easily return huge investments on renovations and additions.

No, that would definitely not be a good investment, except for right around Galloway Golf Course. High Point Terrace is too close to the crime centers to ever spend money like that. Highland north of Poplar, to Perkins. But south of Sam Cooper is Highpoint Terrace, but some realtors want to apply that to less desirable adjacent areas. It cozies up to some pretty tough territories like Highland Heights, Berclair, University, Marquette, and Sea aisle. Those aren’t Highland Heights, even though some realtors do some zip code upgrading for them in their listings. And that’s why putting any money into a project like that would not be wise for any place in HH except for Galloway. The surrounding areas would need to improve by quite a bit first.

To be able to do a project like this, to a smaller older house like yours, with a guaranteed return, you’d have to be in old East Memphis between Poplar and Walnut Grove, along the Perkins to 240 zone. Or parts of Midtown or Crosstown. East is where tear downs are happening, and it’s where money spent on a large property gets recouped, because you can subdivide it, and that pays for the new build. Midtown or Crosstown is where people buy sub 100K, and put in 150K and sell it for 300K. Everywhere else, it’s better to move than remodel so extensively.