Buy small house and add on later?
A client called a few days ago and asked my thoughts on buying a small home and expanding it in three to five years. She and her husband have just had their first baby and are starting to think about space and schools. Her thought is to “get in” to one of the expensive areas known for good schools while the market is down.
I have heard this question many times. My advice: unless she is able to purchase the property at substantially under market value, I do not recommend this scenario. The home in this particular case, in my opinion, was overpriced and would not be a good financial decision.
Specifically, I gave her some things to consider:
What about buying a “distressed” property in a top location? Good idea, but if it is well priced, multiple offers will ensue and diminish its appeal. For more information, see
“On Foreclosures, Short Sales and REOs” and the multi-part “Journal of a Remodelee.”
My client decided to take my advice and take a more long term approach. I will be watching for more appropriate listings from this point on.