UPGRADE YOUR PARENTS’ HOME, OR BUILD ONTO YOUR OWN?
If you’re grappling with the question of whether to upgrade your parents existing property or to build onto your own home to accommodate them, you’re not alone. Many South Africans find themselves grappling with this same complex issue.
This decision is not purely financially based, which makes it one of the hardest to make. Before making your decision, you’ll need to examine both your financial position and your family dynamics so that you can arrive at the best possible outcome for everyone involved.
Below are a few things to consider when contemplating your parents’ housing situation:
Upgrading your parents’ home
If you choose to upgrade your parents’ home, it may stand to increase the value of the property. However, you’ll need to consider that the value of a home is capped depending on the location and desirability of the suburb. You’ll need to be careful not to overinvest when renovating the property as you’ll run the risk of coming up short financially.
Selling your parents’ home
If you choose to sell your parents’ home to use the money to build a space for them on your property, you’ll lose the option of having your parent’s property as a source of rental income. While there are risks involved in renting out a property, the additional income could also help your family live more comfortably.
Building onto your own home
Choosing to build onto your existing property is often the better financial option if your parents don’t own their property or if you’re helping your parents pay off their home loan. Not only will this get rid of a monthly expense, but adding a new space to the home should also increase the property’s value. Another advantage of building onto your home is that, should your living situation ever change, you could rent out the space as an Airbnb or full-time rental.
Best of both worlds
If you can afford to do both, you could potentially upgrade your parent’s property as well as build onto your own home so that there is a comfortable place for them to stay in case of emergencies. This way, you could always have them move in with you temporarily while you rent out their home as an extra source of income to get through a tough financial season or in case extra income is required to cover the costs of an unforeseen medical emergency.
Reach out to your local real estate advisor
Regardless of the decision you make, there will be financial wins and losses. There’s no easy answer to this question, as everyone’s situation is different. However, it could be helpful to speak to a local real estate professional to gather some insight into the possible returns for each option. This should help you make a more informed decision when weighing up the pros and cons of each option.