Author Topic: We bought a tiny house with cash - should we borrow money to add space?  (Read 3896 times)

hammiehaack

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Here's the facts Jack:

-  We paid cash for the house using profit from our former home which my husband (a sub-contractor) built 13 years ago.
-  The current house is 860 sq. feet. Our former house was 2,500 sq. feet. including a finished basement - which I always thought was too big.
- My family consists of me, my husband, and one teenage daughter.
-  We bought our current home because of the beautiful and unique property it sits on - nearly five acres with territorial views of a large creek bed/marsh area and other unique features. In other words, we bought the house for the property it sits on and not for the house. Also the property is quite unique because of its remote feeling yet still within walking distance from the small village downtown that we live in. Also walking distance to school, etc.
- The house is in good shape and was built in approx. 1955.  It is clean and very habitable, but very out of date style wise.
- The house does need a new septic system. And we will definitely want to update the electrical and plumbing.
- We have been living in the house for almost three months now. I love its smallness and am happy to not have to spend half my weekend cleaning.
- My husband, on the other hand, doesn't love it. He thinks it is too small and he is very creative and very talented and wants to either tear it down and start over or make huge changes to the current house which we would have to take a loan out for. He would like to add and upstairs and expand the downstairs basically doubling the size of the house.
-  I  want to update the current house (new windows, updated kitchen, updated bathroom and septic, electrical, and plumbing). But not change the footprint that would add all the extra square footage.
- Several out buildings are also on the property - a one stall detached garage, a woodworking shop for my husband, and a medium size storage shed.
- We are currently debt free and I am hoping to retire in seven years at the age of 55 from my government job. I will have plenty pension and stocks to do so. I am also the main bread winner in the family since my husband is a self employed sub-contractor and his work is sometimes sporadic.
- What should we do??????? Help. Thank you. :)



« Last Edit: February 16, 2016, 12:42:07 PM by hammiehaack »

Gone Fishing

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Re: We bought a tiny house with cash - should we borrow money to add space?
« Reply #1 on: February 16, 2016, 01:06:01 PM »
Sounds like you know the answer.  You just need to convince your husband.  Make the point that the teenager is going to move out of the house in x years, freeing up another room and some living space.  If he is still gung ho perhaps you can make a deal with him where he can make some improvements he wants if he can find some extra work, save up the cash first vs. borrowing it.  Don't forget the extra maintenance, utilities and taxes in your conversations.
« Last Edit: February 16, 2016, 02:15:57 PM by So Close »

neo von retorch

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Re: We bought a tiny house with cash - should we borrow money to add space?
« Reply #2 on: February 16, 2016, 01:19:19 PM »
Quote
We are currently debt free and I am hoping to retire in seven years at the age of 55 from my government job

What are your options for expansion, how much do they cost, and how much do each of those costs affect your planned retirement date?

hammiehaack

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Re: We bought a tiny house with cash - should we borrow money to add space?
« Reply #3 on: February 16, 2016, 01:40:51 PM »
Expansion would cost approx. $70,000. We could have that paid off in the seven years before I retire so it shouldn't affect my retirement plans.

zephyr911

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Re: We bought a tiny house with cash - should we borrow money to add space?
« Reply #4 on: February 16, 2016, 02:02:51 PM »
860SF? That's not a tiny house. This is a tiny house.


Jack

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Re: We bought a tiny house with cash - should we borrow money to add space?
« Reply #5 on: February 16, 2016, 02:08:44 PM »
Here's the facts Jack:

I'm flattered that you want my opinion, but others can give you good advice too.

; )



I always heard that the general recommendation was to wait a year or so after moving in to a place so that you can get used to it (and see what's actually wrong rather than what you think is wrong) before deciding to change it. It could be that your husband might warm up to the 860 ft2 over the next couple of months.

Otherwise, I'm inclined to concur with So Close.

ShoulderThingThatGoesUp

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Re: We bought a tiny house with cash - should we borrow money to add space?
« Reply #6 on: February 16, 2016, 02:09:21 PM »
Can you sell part of your property to help finance work to the house?

Papa bear

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Re: We bought a tiny house with cash - should we borrow money to add space?
« Reply #7 on: February 16, 2016, 02:28:39 PM »
I was all for expanding until I read that you have to go into debt for the renovation. 

This isn't something you could do over a few years and use "working capital" for the material?  I'm assuming your husband will be the labor.  In my opinion, paying cash as you go is just like trading one asset for another illiquid asset.  It doesn't mess with your balance sheet.  You can realize liquidity with the asset (house) when you sell or by taking out a HELOC because of the increased equity.  If your husband does the labor, you could even end up making a fair bit of money! 

Basically, if you can do it slowly with cash, my vote is for expansion.  Taking out a loan? Tell your husband to live in the outbuilding.


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zephyr911

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Re: We bought a tiny house with cash - should we borrow money to add space?
« Reply #8 on: February 16, 2016, 02:48:46 PM »
Smartassery aside, here's what I'd do:

1) Pick the most suitable outbuilding and build in basic amenities. Move into it.
2) Renovate the main house at your leisure.
3) Move back into the main house. You now have an awesome new house AND a detached guest house.

pbkmaine

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Re: We bought a tiny house with cash - should we borrow money to add space?
« Reply #9 on: February 16, 2016, 03:11:51 PM »

Smartassery aside, here's what I'd do:

1) Pick the most suitable outbuilding and build in basic amenities. Move into it.
2) Renovate the main house at your leisure.
3) Move back into the main house. You now have an awesome new house AND a detached guest house.

This is a very good plan.

zephyr911

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Re: We bought a tiny house with cash - should we borrow money to add space?
« Reply #10 on: February 17, 2016, 01:46:59 PM »

Smartassery aside, here's what I'd do:

1) Pick the most suitable outbuilding and build in basic amenities. Move into it.
2) Renovate the main house at your leisure.
3) Move back into the main house. You now have an awesome new house AND a detached guest house.

This is a very good plan.
Thanks.
May well try to do something along these lines for our FIRE home, just to make it easier to get started. The interim house would probably be on top of a detached garage, in our case, where it'd make a nice guest house or workshop (or both) later.
« Last Edit: February 17, 2016, 01:56:25 PM by zephyr911 »