Author Topic: What's the ideal investment/savings vehicle for a home addition?  (Read 2065 times)

bittheory

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I own a 3 bedroom, 2 bath 1500 sq. ft. ranch that for the moment, is absolutely perfect for our family of 3. I'd imagine this house will serve us well as is for the next 5-6 years, but I have a somewhat lofty goal of converting our covered patio into living space and opening it up to our kitchen. By doing so, it would add approx 330 sq. ft. of new living space to our home and I imagine we'd stay in it for at least 8-10 years.

My ballpark estimate of what this would cost it probably $30k-$40k. That's based on the average per sq. ft. cost of an addition in my city.

Seeing this is at the earliest 5 years out, how would you recommend I maximize savings for an big project like this? I do have a Vanguard joint investment account with index funds with $10K in it, and was considering using that, but wanted to ask the experts before moving forward.

Even if we never pull the trigger on a remodel like this, this would ideally be used for savings for a down payment on a new home in 6-10 years.

Thank you.
« Last Edit: August 12, 2015, 11:51:13 AM by M_K »

bittheory

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Re: What's the ideal investment/savings vehicle for a home addition?
« Reply #1 on: August 13, 2015, 09:45:27 AM »
Just to add onto this, I'm thinking about exchanging into LifeStrategy Conservative Growth Fund. 60% bonds, 40% stocks, 0.16% ER.

Any thoughts on advice on using this fund to save for a home remodel or down payment that's 5-6 years out?




ShoulderThingThatGoesUp

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Re: What's the ideal investment/savings vehicle for a home addition?
« Reply #2 on: August 13, 2015, 09:52:23 AM »
Home additions nearly always look terrible and tacked-on.

bittheory

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Re: What's the ideal investment/savings vehicle for a home addition?
« Reply #3 on: August 13, 2015, 10:03:57 AM »
Home additions nearly always look terrible and tacked-on.

I completely agree. Fortunately, this wouldn't be an "addition" as much as it would be converting and finishing an existing 20x16 covered porch into livable space. I'd need to knock out one wall, expand a doorway, increase the foundation footing and add two exterior walls with windows. Would also be an opportunity to upgrade some areas of the kitchen. Plus, it's in the backyard, so if it does look terrible, it at least won't look terrible to the neighborhood.

I HATE the idea of having to do this, but love the idea of adding more value to my home, staying in a neighborhood that we love and giving us some much needed living space in the coming years.

frugaliknowit

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Re: What's the ideal investment/savings vehicle for a home addition?
« Reply #4 on: August 13, 2015, 10:18:50 AM »
I am guessing what you mean by "maximizing savings" is "where do I park the funds" for the addition...?

If so, I would go "risk free", since we are talking 5 or 6 years.  Savings account (1%ish) or whatever high yield checking accounts you can find (if you and your family can keep your paws off of it and jump through whatever hoops are required).

bittheory

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Re: What's the ideal investment/savings vehicle for a home addition?
« Reply #5 on: August 13, 2015, 11:06:54 AM »
If you don't mind my asking, are you planning on having more kids? Moving in elderly relatives? Do you have a space intensive home business? 1500 square feet is a lot of space for a family of three as it is.

That said, I'd use a savings account.

Sure, we are planning on having more kids. In fact, we just found out my wife is pregnant 5 days ago, due this coming spring. So there will be four of us. We are lucky to have found a 3 bedroom, 2 bath home in the city, so we have room in that sense, but it'd be great to have a true "dining room" and additional living area to spread out a little more. The ideal way to do that is to build this addition. I'm lucky in the sense that this is less of an "addition" and more of converting a covered porch into a four seasons room.

What's your opinion on saving for this with 1/2 going into my savings account and 1/2 going into Vanguard LifeStrategy Conservative Growth Fund (VSCGX). Is that a bad idea?