No discouragement at all. We actually strongly considered this after going through the first part of the conceptual design with the architect because you're not wrong, it is not a cheap remodel, and we wondered if it was worth the cost and stress to go through the process rather than just buying what we want. But after looking around for a couple of months with a realtor and online, what we found was between commissions, closing costs, and the jump in interest rate we would be taking on the new note (we currently have 2.5%), we actually could build for cheaper than or similar to just buying what we are looking for. On top of that we really love where we live, both the part of town generally, and the street we are on specifically, and to get what we are building without going way outside the area, we really struggled to find something that wasn't going to be a significant price jump, or just getting very lucky. Then lastly, there is the emotional connection to the specific home/location. We've lived there 11 years and its the home we've brought all 3 of our kids home to, so that weighed in too.
So that was our general thought process and why we landed how we did, but on top of that, for the logic around the numbers to work out in line with our assumptions, we've done a lot of work on the front end to really control the build cost. When you include the renovated square footage combined with the added A/C square footage (garage not included), we should end up under $200/sq-ft. To do that we found a builder that seems to do good work but who would also really work with us to help control that cost by doing things like removing some of the existing windows and doors during the demo to be re-purposed in the new spaces.
