Hi @Jon Schwartz, thanks a lot for pitching in!
The 400k$ quote is for a quite extensive whole house remodel (moving walls, windows, openings, expanding footprint and +1 bath, +1bed) and includes design, consultants and permits. The house is quite old, needs all systems to be upgraded, and has an strange shotgun 2 bedroom setup. So we see ourselves willing to invest to make it more comfortable for our time here. The 100sqft addition would be including two stories, so 200sqft total at ~460$/sqft. Here's what the quote covers:
- Conversion of 2 bedroom, 1 bath main house to 3 bedroom, 2 bath (~1040 sf footprint)
- Demolition of existing walls (existing dining room wall, wall between kitchen and living, bathroom closet)
- Finished Shell (Reframing opening to living room and kitchen, shifting openings for bathroom/bedroom, new walls at bathroom and dining, level
- Replace all aluminum windows with fiberglass windows and screens
- Upsizing plumbing, and relocating fixture locations as necessary
- Upgrading electrical panels
- Assume heat pump and ductless mini-split for heating and cooling
- An allowance for kitchen appliances including combination range, hood, dishwasher, microwave, refrigerator, and washer/dryer
- An allowance for mid-grade plumbing and lighting fixtures (Delta, Kohler, or equivalent)
- Mid-grade plumbing and lighting fixtures (Delta, Kohler, or equivalent)
- Ikea cabinets or equivalent with solid surface countertops, includes island
- Assume solar system to be installed on the house including battery storage
For the garage ADU, the garage would need to be demoed and rebuilt, but we would benefit from building within the setback since the garage is on the property lines. We're aiming for something designed and higher end, in part because we'd live in it for the duration of the remodel + houselift of the main house, and feel good looking at it from our house. The property has a certain charm we'd like to maintain. Builder is pricing the overall build at 550$/sqft for a design option for a 2bed/1bath, two story. The quote states:
- Demolition of and reconstruction of the existing garage and concrete foundation as necessary
- All electric ADU fixtures, appliances, and systems with electrical panel upgrade for the main house (?amp existing panel)
- Fiberglass wood clad windows with screens, an exterior swing door and 4 panel sliding glass door, and standing seam roof and a skylight, 2 new - glass garage doors
- James Hardie fibre cement board or similar siding
- Built-in casework for storage
- An allowance for kitchen appliances including combination range, hood, dishwasher, microwave, refrigerator, and washer/dryer
- An allowance for mid-grade plumbing and lighting fixtures (Delta, Kohler, or equivalent)
- Ikea cabinets or equivalent with solid surface countertops
- Assume heat pump and ductless mini-split for heating and cooling
- Assume solar system to be installed on the ADU per California Solar Mandate, including battery storage
With regard to the JADU, we're considering dropping this and simply expanding the house to the basement. A house lift and new foundation is required and was quoted at ~170k plumbed & wired, but not finished.
All that said, I appreciate you walking me through the numbers, I wasn't sure how to apply these equations to our situation. And the market here in Berkeley is very hot, so it makes me a bit confused when comparing this situation to people who talk of REI in lower costs and cooler markets, as I'm not sure how well the numbers translate. E.g. for the market here, I've been told to expect rent to grow at 4-5% per year (assuming tenant turnover every 2-3y) and property value to increase at 8-11% per year.
Given all this, do you think this is still not worthwhile? For context, I don't plan on doing more REI on other properties for the next 5-6y either, so it's either I do some version of this investment (with a construction loan @ 65% LTV) or keep the downpayment part (35%) in the stock market.
