What Renovations Add the Most Value - Posted by JJ

Posted by Randy on July 02, 2003 at 06:26:43:

There are many web sites confirming such values. Just do a search at Ask Jeeves www.ask.com or Google www.google.com.

This one came from American Publishing
http://www.ampub.com/tools/value.html

What Renovations Add the Most Value - Posted by JJ

Posted by JJ on July 01, 2003 at 13:50:54:

Hello Everyone,

I own a house at the shore that I have been renting out for the past 3 years and now live in full time. I’m thinking of living in it for two years while fixing it up and then hopefully selling with no capital gains taxes and then looking for another bigger house that needs fixing up and doing the same thing again. My questions are

  1. What renovations/improvements can I make to the house to add the most value at the least cost?

  2. What should I look for in my next rehab house?

I appreciate the help.

Regards,
JJ

Re: What Renovations Add the Most Value - Posted by RichV(FL)

Posted by RichV(FL) on July 01, 2003 at 18:26:42:

JJ,

I do my rehabs very much like Rob FL does. Fresh paint, some new landscape, clean or replace old bath and kitchen fixtures, new carpet or a cheap tile, etc.

I try to stay away from work I need a permit for, but I have been known to change a roof or two.

Try to keep cost down as much as possible.

So far this has worked well for me.

Great Success,

RichV(FL)

Re: What Renovations Add the Most Value - Posted by Randy

Posted by Randy on July 01, 2003 at 15:48:12:

How to Add Value to Your Home
Not all home improvements add the same resale value to your home. Some of them increase resale value greatly while others do not. Of course the enjoyment you receive from home improvements may be more important to you then increasing resale value.

Adding a fireplace to your home may increase the resale value by 160%. A swimming pool costing $20,000 will only add 33%, $6,700 to the value of your home. most homeowners consider pools as safety problems and maintenance burdens.

A new full bath will increase the resale value of your home by 125% to 130% of its cost. A greenhouse added to your home will increase value by 100% of costs. Skylights and kitchen renovations increase your resale value 95% of their costs.

A new roof not only eliminates leaks, water damage and home owner headaches, but it also adds 120% of its cost to the value of your home. Other profitable improvements are attic or basement conversions, which return 100% - 125% of costs. A new deck or patio returns 100% of costs. Most other improvements return from 60-90% of their costs, for example, new bedrooms, window, landscaping, air conditioning.

Insulation & energy upgrading adds 30-50% of costs, but pays for itself through reduced fuel bills.

All of these figures are based upon installation costs charged by professional licensed contractors. The do-it-yourself home owner can realize even higher percentages of increased resale value; however, they risk creating safety hazards and building code violations when a prospective buyer orders a home inspection. Correcting work always cost more than doing it properly the first time. Licensed professional contractors warrant their work for safety and code conformity.

Regardless of the investment, room additions increase resale value, but they should be undertaken to improve the liveability of the property. They should be an improvement. Ask yourself, “Will this addition improve the quality of daily life in my home?” If the answer is yes, then this addition will also increase the resale value.

Re: What Renovations Add the Most Value - Posted by Rob FL

Posted by Rob FL on July 01, 2003 at 15:28:40:

I have read several Bob Bruss articles on this subject. You may want to get on yahoo.com and see what you can find on this subject.

In my own personal experience, the cheapest way to improve value is clean a property up and paint it inside and out. Other ways to get the most from your money are to update the kitchens and baths, but these can cost a little more money.

Re: What Renovations Add the Most Value - Posted by Eric C

Posted by Eric C on July 02, 2003 at 11:00:36:

Hi -

Good post and an interesting thread. But I can’t say that I agree with everything on your list – the problems (and high maintenance costs) of pools – yes. Roof – no.

In the last few years when new mortgages have been far easier to qualify for than to afford, many things have been said to increase re-sale value.

As a long-time investor and a longer-time landlord, your last question rarely applies. Yes, I am interested in improving the quality of life for my tenants – as long as I improve the quality (and quantity) of my return at the same time.

Every magazine, focus group, decorator show, and guru has a list of the items that are “guaranteed” to increase resale values. Few, if any of those folks have any long-term experience in actually selling those properties – with or without those improvements. By long-term I mean more than one cycle or two.

Here’s the deal – what moves homes changes from time to time, from area to area (often neighborhood to neighborhood), and from one property class to another.

It also changes drastically with the availabilty of money, the sheer number of inventory (props for sale) and the class of buyers (first-timers, empty-nesters, quick change artists, etc).

One group I do follow is the home builders – they get their feedback often (daily) and the information has usually been paid for quite dearly.

Over the years I’ve had the pleasure to work in great times and the good luck to also stay in the biz during the bad (the source of all true wisdom).

During those years, sometimes I’ve added nothing other than a cleanup and new paint to get top dollar while at other times I’ve thrown in landscaping, paid up gardeners, outdoor spas, custom kitchens, jacuzzi tubs, central vacs, and more (including dream vacations for the selling Realtor and the Buyers).

In short, anything to move that property. Sometimes it takes a lot – sometimes it doesn’t.

Your take on the cost of reworking is right on the money, but before anyone rushes out to start “improving the quality of their daily life”, they should check their egos, wallets, and business plans at the door.

Good post. I’m sure there will be others with different experiences and viewpoints. That’s to be expected and I’m looking forward to hearing them.

Take care,

Eric C

PS – interesting thing about those Builder’s surveys – sometimes they surprise even the most jaded of us. One of the last “top ten” lists of buyer wants included things like: exhaust fans, exterior lighting, rear patios, closet shelving, a rear patio – what’s going on here? These are things that could easily be added (at very low cost) to many existing homes. Hmmm… right!

Re: What Renovations Add the Most Value - Posted by Paul

Posted by Paul on July 01, 2003 at 22:42:41:

Please share with us where you get your cost % estimates.
Thanks,
Paul

Re: What Renovations Add the Most Value - Posted by Randy

Posted by Randy on July 02, 2003 at 11:39:36:

Thanks for the editorial comments. In the original post from JJ he said he lives in the house and intends to for the next two years. The average family home turn over is 2.5 years according to Realtors I?ve talked to?. So he?s normal. For strictly INVESTMENT Properties no way? but thanks for keeping me honest.