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Need help with remodel math

We live in Alexandria, Virginia just 20 minutes outside of DC. Currently we own a home we bought for $500k that is a ranch and we're considering putting a second floor addition onto the house. Each year 5-10 houses in the neighborhood are doing this and this past year most were selling for about $1.1M (most of these ones are being bought and flipped by builders where as we're planning on this being a very long term home). We've gotten a few quotes from more respected builders in the area that our expansion will be roughly $600k to put a 2nd floor on and go back a little further on the property more than doubling the square feet.

What I am struggling with now is that even though I think the math seems to workout $500k + $600k = $1.1M what might I be missing in the calculation? My head sometimes plays games with me and says that it'll always still be a $500k house despite doubling it. What other questions should I be asking myself? What other factors should I be considering?

Side note: we don't have anymore payments on our current house and can already fund the addition and living in a rental for a year or so during construction.

submitted by /u/areesej
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source https://www.reddit.com/r/RealEstate/comments/r52pi1/need_help_with_remodel_math/
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