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Ask Dave

Investing By Adding On?

Ed should do a little research before he adds onto his house, so that he won't over-build for his area.

QUESTION: Ed wants to know if he should invest in his home by adding on rather than putting money into mutual funds.  Houses in his neighborhood are in demand, but he doesn’t want to over-build for the area.  What should he do?

ANSWER: You’re right – you need to be careful to not over-build your area.  Ask yourself if you would consider buying a $350,000 house in this neighborhood if you were the one looking for a house.  If the answer is yes, then make that investment and build on to your house. 

You should also do a little research and find out the value of some other houses in your neighborhood.

Just make sure you’re not trying to justify building onto your house just because you want to.