Overcapitalization vs. Life Style

We are having to be quite careful we go about renovating our house. You quite often hear about this issue when you look at spending any substantial amount of money on a house, so I wanted to put down some of what I think about it here.

For us it’s a bit of a balance between overcapitalising and life style.  On our first house we spent about $20,000 on a deck that a few people, including my dad, told us was over capitalising.  I think that if we lived anywhere else other than in the tropics they would have been right.  Here in Townsville though the deck takes on the roll of a second living area and a true extention of our house, which is why we want to add one to the new house as soon as we can.  For us this is a big life style issue

If we were purchasing this house with the plan to be out of it within only a couple of years then our plans would be significantly different that what we actually have.  Our primary focus would be on getting the most financial return, or Return of Investment (ROI) for our money, rather than what we are going for, which is the best life style that we can have within our limited budget.

The article linked to below gives a bit of insight into what they think offers good return for investment with houses.

The ROI of Remodeling in 2005 | HouseBlogs.net

One Reply to “Overcapitalization vs. Life Style”

  1. Trissa

    I agree that you need to take into consideration how long you are going to be in the house and how important it is to you. Having a great deck that is an extension of the house is awesome! We would do many things differently if we weren’t planning on staying in our house for a long time. I also think a bit extra time, energy and money to do the jobs well is worth it- the quality of materials and labor make a big difference in cost!

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