Upsizing to accommodate a growing business

Suzie Wilson

Danish Modern San Diego welcomes back guest blogger Suzie Wilson!

​Suzie Wilson | [email protected] | Author of The Ultimate Guide to Prepping Your Home For An Open House | Website: https://happierhome.net/

Edited and formatted by Dawn Torres-Reyes

Beautiful blue and yellow painted wooden 18th century house of the Moravian community in Salem, North Carolina.
Image Source: Unsplash

Upsizing Your House For Business Expansion​

There's never been a home buying market quite like this one. The pandemic has made this year an exceptional time to become a homeowner, which is especially advantageous for you if you are looking for a larger place to reside as your home-based business expands. Danish Modern San Diego presents a few things you need to consider when looking to upsize because of your growing start-up.

Review Your Finances

The first aspect to consider before buying a bigger house is whether you can afford it. You can lose your sense of financial security if the monthly payment is too high and your business, although expanding, cannot help in paying for the greater expense. On the other hand, you should also foresee the future of the financial status of your enterprise and consider it when upsizing. As a rule of thumb, lenders usually require you to earn a minimum of three times the monthly payment on a new house. The amount typically includes mortgage principal, property taxes, interest, and owner insurance; still, it might also cover mortgage insurance if you put less than 20 percent of the down payment, as well as special tax assessments and association dues.
 
So, how much down payment do you need? Expect to put down at least 3 percent to 3.5 percent of the sale price of the home. You also need to budget for closing fees, which usually add 2 percent to 5 percent of the purchase costs to your upfront fees. Keep in mind that mortgage loans with less than 20 percent down payment typically charge private mortgage insurance, adding to your monthly bill.

Get Pre-Approved for a Mortgage Loan

The second step toward purchasing a house has not changed, although the pandemic has significantly altered how we do certain things. Potential home buyers should still start the purchase process by getting pre-approved for a home loan. A pre-approval letter doesn't guarantee that a lender will work with you, as they will analyze your finances more closely during the formal application process. However, the pre-approval does give you a sense of whether you will qualify for financing and how much in loans you might be able​ to get. Not only does this help you stay focused in your house-hunting process on properties you can afford, but it also tells your realtor and the sellers that you will likely finalize the purchase once you have made an offer. When venturing into this process, it is best to work with a real estate agent who knows the ins and outs of the industry and can show you the best options.

​Consider Home Features and Amenities

Rather than purchasing a bigger house without considering your needs and wants, analyze the home's features to ensure it fits your requirements. For instance, a property with no extra space like a garage or a basement might not be a practical choice if you want to move because your business is growing, or the home's layout poses issues that are costly to remedy or add. Another consideration are the needs of your family members, which may include separate living and working areas. For your business, the space should have an office and perhaps a garage or extra room to store products and materials.
 
There is also the option to buy a less expensive house that you renovate or modify according to your needs. Think about what changes you would need to make and write them down. Include modifications for creating a home office, living space, and other areas that need changes to comply with your business needs. When planning your office, consider painting the walls in neutral colors and using wallpaper to make the space inviting, but still elegant, when meeting your clients or having virtual conferences. Wallpaper can also be customized — meaning you can always order more — and is more durable than paint. Peel-and-stick wallpaper is a great choice as it can easily be removed and re-attached.
 
Of course, you will need to make all these decisions while you are operating your business. This includes everything from registering your business with the state to deciding whether you would like to pursue further education to expand your skill set toward improving your business. This may include in-person and online courses. Make sure you have a plan in place that can help you balance all these tasks.

The Bottom Line​

Real estate presents a fantastic opportunity right now. If you are thinking of taking advantage of the circumstances to buy a bigger home to accommodate your expanding venture, it could be a brilliant move. Just make sure you do this with awareness and consider all the aspects that come with this move while planning.