We’re Renovating in the Middle of a Shaky Economy — Here’s Why
tl;dr: Our worst-case scenario is working a bit longer to enjoy the home we really want today
Life is absolutely uncertain right now. In the past year alone, I’ve watched our brokerage account climb $100,000 post-election, drop $150,000 just months later, and then surge $200,000 in the following four months.
Meanwhile, I’m switching jobs: from a very early-stage startup (low salary, high potential upside via equity) to a late-stage startup (market-rate salary and bonus, smaller potential equity upside) to better align with my career goals.
Because I like to keep life…interesting, we’re also selling our residential real estate portfolio and rolling the proceeds into one or two short-term rentals.
Fold in job market instability in tech, relatively high interest rates (for those of us who bought homes prior to 2020), and you might wonder: Why renovate now?
1. We’ve Been Putting This Off for Years because of my “Founder quest”
My partner has been incredibly patient of my need to answer “what if.” I always promised that after my quest concluded (success or failure), I would focus on making up for the years where we scrimped and scraped through. This is a big one that we kept pushing off.
2. A Renovation is Enjoyed in Real-Time
The beauty of responsible leverage (especially for homes) is that you can enjoy the upgrade now and pay for it over time.
If it takes us 10 years to pay this off, that’s 10 years of daily enjoyment–starting now. We know we’ll enjoy it because we (fortuitously) renovated our kitchen and dining room in 2019, and we appreciate those spaces every day. Without that update, I’m certain we would’ve sold our house during COVID lockdowns.
And while saving up to pay in cash is an option, it means:
Potentially missing market returns on that cash
Paying more later (due to rising labor and materials costs)
3. Our Downside is limited
If the market dropped 50% and I temporarily lost my job, we’d still be okay. We have:
Emergency reserves to cover a few months without income
The ability to cut back on discretionary expenses (about 45% of our budget)
The option to redirect cash from selling our rentals instead of redeploying it
4. Uncertainty Isn’t Going Away
Personally speaking, I don’t see AI’s transformation of the job market slowing down any time soon. While I’m not a doomsdayer who thinks we’ll have 50% unemployment, I do believe temporary displacement will keep happening while we all figure things out. We’ve already seen companies over-index on GenAI and reverse course, and I’m certain it’s not going to be the last misstep.
Your Turn
Would you renovate right now? Or does it seem like tempting fate? Judging by the number of construction dumpsters I’ve seen in our neighborhood, I suspect we’re not the only ones making upgrades in uncertain times.