New Avenue is a unique accounting and administration software for home remodels. We can answer the question of “what does it cost to build…” better than anyone because we have provided the accounting services for over 100 projects in the past three years. 100 projects is more than almost any contractor or architect will see in their entire lifetime. Our up to date information provides insights that you can only get from New Avenue.
However – there’s another question worth asking. What is a project worth? What is the value to me as a person? What is the value to my family?
Warning, this is absolutely serious post but few people are prepared to realize the true value of their home. The banks and companies like KB Homes have done a very good job of selling a big fat lie about home values being driven by comps. Comps are nonsense – a home is all about what it provides to you and your family.
Resale, appreciation and mortgage interest tax deductions are almost common knowledge but they are also the least valuable part of a good home. Here is our list of more important value factors:
1) Help from mom: Having a mother or mother-in-law around to help out with a new baby is easily worth the cost of childcare but that watchful eye is helpful with teenagers too. That is anywhere from $15,000 per year until school starts for one kid or $40,000 per year for two. Assuming three years, let’s say that’s a $100,000 savings.
2) Distance from your mother in law: That same parent who helps with childcare can cause your spouse to run for the hills and never look back if he or she is always peering over your shoulder… Their lost salary is easily another $1,000,000 over the course of a lifetime.
3) Your sanity as a new parent – having your parent or mother in law around to help with a new baby or teenager will save you your sanity and allow you to continue progressing in your career. Your sanity is worth another $1,000,000 over the course of your lifetime.
4) Your sanity when you’re older – living with just your spouse or alone as you get older is not ideal. Interaction and being needed helps to keep you sharp. If you build an accessory dwelling for yourself and have your children or grandchildren, or even a tenant, sibling or friend living there then you’ll benefit from improved mental and physical health in your bonus round of ages 70-90.
5) Home Office – run a small business or a collection of businesses over time. Turning a hobby into an income is one of the best ways to maintain your savings and get tax deductions. $20,000 per year for 50 years is another $1,000,000.
6) Mortgage Deduction – You can deduct your mortgage interest on any loan that you take out for your remodel, addition or accessory dwelling. Assume a 25% tax rate and $10,000 in interest per year for $2,500 per year. Over 30 years that adds up to $75,000.
7) Avoid robberies – At a minimum enjoy peace of mind when you are on vacation or as you age in place. A family member or tenant nearby is a built-in house sitter.
8) Nursing homes kill you – This is a harsh reality but life expectancy plummets when you move to assisted living or a nursing home.
9) Tranquility– You don’t need a specific reason to enjoy your own private space for peace of mind. Maybe you’re the next JK Rowling? She’s a billionaire. If everyone had an accessory dwelling would we have another Harry Potter? Or maybe another Tolkien? The world can certainly benefit from a few more Harry Potters.