The twins have decided that they don’t want to share a room. Ever since you’ve bought the lake house, you’ve entertained more and realize the need for a guest room and a second bathroom. Or your husband took a new consulting job and needs a home office. If you’re running out of space and don’t want to move, consider adding on.

If it seems like everyone you know is remodeling, you’re right. “This is the hottest remodeling market in history,” says Ed Stewart, vice president and treasurer of the Home Builders and Remodelers Association of New Hampshire (HBRANH) and chairman of the Remodeling Council.

Richard Davis, executive director of the Remodeling Contractors Association, agrees. “Through industry sales, we do know that remodeling gross sales are about equal to new residential construction. Baby boomer demographics point to remodeling outpacing new construction in the next decade.”

“Is an addition worth the investment? Sales indicate that remodeling a kitchen or bath immediately returns invested dollars plus a profit,” says Davis.

Why build an addition? Moving typically costs between 10 and 15 percent of the value of your home. If you like your house and your neighborhood, it might be a better investment to spend that 10-15 percent on an addition.

“The devil you know is better than the devil you don’t know,” says Stewart. He also reminds homeowners of the real estate commission that comes into play when selling your home. “Sometimes that could be the cost of an addition, or at least significantly defray the costs.”

Although many families plan additions to improve the quality of their life, it can be a wise investment to build that extra room. According to Remodeling magazine’s 2000-2001 survey of real estate professionals in 60 cities across the country, there are some additions that always provide a higher return on investment. For example, a second story addition that costs $67,744 has a resale value of $56,770, recouping 83 percent of cost. A bathroom addition, with an estimated total cost of $14,216, returns 81 percent.

However, the amount of the return may depend on the market. Homeowners nationwide can expect to recoup 68 percent on a master room addition, but the return could be 91 percent or more in Seattle or San Diego. For example, a garage would be a better addition than a sun porch in snowy Syracuse, N.Y.

Before you decide, map out the pros and cons of building an addition. The Web site www.letsrenovate.com is a great place to start. There’s a home remodeling checklist that includes house plans, design software, a free specification sheet and information on types of home financing.

If you’re determined to make money on your investment, Realtor Magazine publishes an online Remodeling 2002 Cost vs. Value Report which includes returns for all major investments from two-story additions to bathroom additions.

“Is an addition worth the investment? Sales indicate that remodeling a kitchen or bath immediately returns invested dollars plus a profit,” says Davis. “Other rooms in the home depend on demographics. For example, if you were to resell a home with a new family room to a younger family with children, there would be added value. The same is true if you added on a master bedroom on the first floor and sold it to a retired couple.”

And talk to a realtor about what makes buyers buy in your market. You can “over improve” a home.

“If you buy low and improve via remodeling, you are generally safe,” says Davis. “If you overpaid or are at the top end of recent sales prices, you can run the risk of not getting a dollar for dollar return.” Davis notes that most owners remodel for personal enjoyment of their home and a return on investment is a secondary consideration.
If you’re ready to start building, here are a few words of advice about additions:

Design

Look around the neighborhood for examples. Gather ideas from magazines and home shows. When you think you know what you want, quickly sketch the addition you’d like. Make sure the addition blends in with existing structure and style.

Details

The difference is in the details. Write everything down, from the location of property lines and landscaping alterations to moving utilities and the type of lighting. This information will help you plan a budget or assist a contractor with an estimate.

Cost

Establish a budget. Calculating the costs of remodeling requires pricing construction materials, construction labor, permit fees, decorative enhancements, repairs due to remodeling and clean up.

ServiceMagic.com has online project estimator software to help you calculate a cost for your home project. All you have to do is enter your ZIP code to view pricing for your specific area and a general project, like a one-floor addition with basement, to immediately see a ballpark cost. If you want to add in some features, like siding, windows, closets and lighting, you can then see their effect on the total cost.

Count on spending only 80 percent of your budget and keep 20 percent set aside for unforeseen changes and problems. “No matter how well a job is planned, change orders are common,” says Davis. “Homeowners often want more than they thought after the contract is signed and/or the contractor discovers needed improvements as he tears down walls. A reserve is great if it can be afforded.”

Do It Yourself or Hire a Contractor

If plans require the removal or alteration of a supporting wall, contact a building engineer or architect. Major structural changes, including moving doors and windows, is not a project for a weekend do-it-yourselfer.

“There’s an inherent danger in acting as either your own general contractor or your own carpenter,” says Stewart. “It quickly becomes a full-time job. I’ve been doing this for 35 years, and people always regret doing it themselves. It takes too much time and costs more in the end.”

An addition often requires the expertise of service professionals from several trades, such as plumbing, electrical and carpentry. A general contractor or a remodeling specialist can coordinate the efforts of professionals in other trades.

Call at least three contractors to get estimates, and choose the one you feel most comfortable with.

“The two most important planning considerations are a professional contractor and a realistic budget,” says Davis. “A competent contractor is essential to planning a remodel and giving a realistic cost to a job. Homeowners can face sticker shock when they realize that remodeling is often more costly that new construction on a per square foot comparison.”
Stewart offers a free National Association of Home Builders handbook, Remodeling Your Home, “which is chock full of every question you might think of, and some that you may not think of.” E-mail him at boardwalknorth@comcast.net for your copy.