Hi guys I would like to know how to increase porperty value by doing renovations I’m currently in the process of purchasing a home and I maybe selling it in a little while…also are they any good books on the subject? thanks guys
I think that it depends on what your plan is for the property (long term hold or not, renting it out, or putting it up for sale), as well as what kind of area you are in.
There is all kinds of information on the internet having to do with what kind of return you might see for different types of renovations, often broken down by geographic area. For instance, kitchens and baths cost alot, but done well can return well. Of course this is very dependant on how much you are capable of doing yourself.
A new deck, in my area, can pay back very well, especially if you are willing to build it yourself. In other areas not so much.
You also just need to use common sense. You need to budget your total improvements so that you don’t price yourself out of line with the surrounding area. Also, you want your improvement to fit in with the rest of the property. In other words, the bathroom remodel might look great, but the marble tile doesn’t fit with the 125,000 sales price. I think that any improvement should show good quality, but not outshine the rest of the place too much, it can have the effect of highlighting other shortcomings.
I buy mostly with the idea of holding long term, so my ideas might not all apply to you. I try to strike a balance between what will stand out to a renter, and longterm stuff (like roofing) that might not matter to anyone else (unless it leaks), but will head off future headaches for me.
AP is right. The key is doing what you need to do in your area (decks, marble, pools, etc). I assume you are talking about resale. Houses sell for what the market says they sell for and less. Your house will not sell for more than what the other houses like yours in that same subdivision and section sell for. If your house does not have the amenities that are required in your area, it will sell for less than that amount. It will NEVER sell for more than what the area sells for unless you wait for appreciation or some guy has to live next to his best friend and will overpay for the house, or he grew up in the house and his pet hamster is buried in the back yard. In any event you can’t plan on that. You are not going to sell a house for $160k in a neighborhood that everybody else is selling for $150k. No matter what you put into it.
LITTLE KNOW SECRET:
Lets say the comparable homes in the area have an average utility bill of lets say $1,500/YEAR.
For every dollar less than the average your home gains 15-20 dollars in value:
Average = $1,500/YR
Subject = $1,000/YR
Added value = $10,000
Some of the “energy improvements” cost very little, others (like mechanicals) will cost you a little more than average. The certification of your “energy efficency” costs very little (about $150). Contact a “Home Energy Rater” for more details.
4EEM’s comment is an intersting one.
Makes sense to me, but only if you work that into a sales pitch of some sort. I know that in buying my first 2 homes, I was thinking more in terms of what was broken and what was new. Never occurred to me until after the fact that I wanted to improve energy efficiency.
Maybe I was just alot more green than the rest of you.
What I find strange was in my area(in New York) the houses in my neighborhood cost about 590k-600k right, but a neighbor of mine went out and bought a house next to mine for about 590k spent 2 months fixing it up and selling the house for 735k by adding another story and converting the house to a 2 family house …although it took about 4 months to sell…is he just plain lucky or am I missing out on something?
and oh yes houses about 2 blocks away from me start at around 600k and go up to 690k
The appraiser will give you the value for “energy upgrades”, but yeah…work it into the sales pitch.
adding another story and converting the house to a 2 family houseNo, you are not missing anything. You have different comps now. You actually have a different house than what you started with. The same thing is done if you get a property re-zoned or othewisw change the use.
aaah! okay… it was so obvious…thanks!