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Posted by Malcolm Hoar on November 30, 2006, 4:46 pm
kimshapiro100@yahoo.com wrote:
>need advice ...ROI on Home upgrades / features
>
>My sister lives in the SF bay Area, CA. She wants to upgrade her home
>with new kitchen granite,
>flooring, carpeting, bathroom tiles, marble entryway, additional new
>bathroom etc
>
>She is wondering if "the upgrades" are a good investment ? and will
>they appreciate in time ?
>In other words if she is planning on spending $50,000 on upgrades, will
>this $50,000 appreciate at say 6% or would she better off investing
>in mutual funds ?
>
>I have 2 important questions...
>1.generally does get one's money back from these upgrades ?
>2. Do the upgrades appreciate with the home ? ie if a home appreciates
>6% a year in the SF Bay Area, CA would her upgrades appreciate as well
>?
>
>If you think this would bring in a good ROI, would you pls advise as to
>which materials to use ?
>What tiles, carpets, marble, granite are best for ROI and maintenance
Spending $50K on upgrades is likely to produce a negative
return on resale.
Spending $10K on upgrades could very well produce an
attractive return. Stick the rest in mutual funds or
whatever. But you'd have to spend that $10K very wisely.
Generally speaking, the positive returns come from
relatively low cost cosmetic upgrades (e.g. a coat
of paint).
I have recently completed a fairly major kitchen
remodel. However, with careful shopping and a *lot*
of my own labor, I was able to do this for $7-8K.
I firmly believe that I'll get that back (and some)
if we sell.
If your sister doesn't have much of a clue about
these things, she could do a lot worse than speak
to a realtor. The good ones would be able to provide
really good advice and may be willing to do so for
free in the hope you'll give them your business if
and when you do come to sell.
--
|~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~|
| Malcolm Hoar "The more I practice, the luckier I get". |
| malch@malch.com Gary Player. |
| http://www.malch.com/ Shpx gur PQN. |
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
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Posted by on December 1, 2006, 10:16 am
I'd have to strongly disagree that upgrades are a loss and you will
never get the money back. I've seen lots of articles by professionals
that show that there are some upgrades that can in fact return more in
resale value than they cost.
Some examples that can return 100% or more:
Adding a second bath to a home that has only one.
Redoing an outdated kitchen
Landscaping
Paint
A classic example that, in most parts of the country, has little or no
return:
Swimming pool.
There is a current show on cable, think it's HGTV, called My House is
Worth What? They bring in an real estate agent/appraiser to go over
houses that folks are thinking of selling to figure out what they are
worth, and what changes they could make to increase the resale value.
I've seen lots of suggestions where they've told them to do things like
redo the kitchen for $40K, because it should bring $60K in resale. One
owner was considering adding a garage, (the home didn;'t have one,
similar homes did), and even the return on that was estimated to be
over 100% on resale. You should watch the show. I've even been
surprised. For example, there have been homes where the homeowners had
recently spent like $70K on a kitchen, with granite, wood floors, top
appliances, the works. The estimate was that they would get all the
money back, and I think possibly even more.
Now, in the case of a kitchen, for example, it obviously makes a big
difference in how old and dated it looks. I sure would't rip out a
presentable 10 year old kitchen on the hopes of getting a positive
return. But if it's 30 years old and looks it, then it could bring a
positive return.
As for the upgrades continuing to appreciate with the house, in general
they will.
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Posted by Goedjn on December 1, 2006, 11:53 am
On 1 Dec 2006 07:16:28 -0800, trader4@optonline.net wrote:
>I'd have to strongly disagree that upgrades are a loss and you will
>never get the money back. I've seen lots of articles by professionals
>that show that there are some upgrades that can in fact return more in
>resale value than they cost.
>
If you, as the person living in the house, aren't willing to
trade the $50,000 (or whatever) for the priviledge of living
with the upgraded stuff, why do you think that whoever buys
the house next will? And if you *ARE* willing to
trade the $50,000 for the priviledge of living with the
upgraded stuff, why do you *CARE* if the person buying the
house next will?
--Goedjn
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Posted by on December 1, 2006, 12:46 pm
Goedjn wrote:
> On 1 Dec 2006 07:16:28 -0800, trader4@optonline.net wrote:
>
> >I'd have to strongly disagree that upgrades are a loss and you will
> >never get the money back. I've seen lots of articles by professionals
> >that show that there are some upgrades that can in fact return more in
> >resale value than they cost.
> >
>
> If you, as the person living in the house, aren't willing to
> trade the $50,000 (or whatever) for the priviledge of living
> with the upgraded stuff, why do you think that whoever buys
> the house next will?
I don;t see this as an either or. Many people, like the poster, when
considering what they might choose to upgrade in their homes are
interested in how much it could increase the resale value. If they
are considering among several things they might like to do, it;s only
reasonable to think about which of those would increase the resale
value the most.
A lot of how much a house sells for is the impression it makes when
people look at it. Your argument is like saying I have a used car to
sell, it's dirty, but I don;t mind it, so why should I spend money to
have it cleaned before selling it?
And if you *ARE* willing to
> trade the $50,000 for the priviledge of living with the
> upgraded stuff, why do you *CARE* if the person buying the
> house next will?
>
I would care because I'd like to get as much of my money back at resale
as possible. With some upgrades that happens and with others, it's
well known that you will get little if anything. Or even worse, some
"upgrades" can actually decrease the value.
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Posted by Malcolm Hoar on December 1, 2006, 12:33 pm
trader4@optonline.net wrote:
>I'd have to strongly disagree that upgrades are a loss and you will
>never get the money back. I've seen lots of articles by professionals
>that show that there are some upgrades that can in fact return more in
>resale value than they cost.
And most of those articles are written by professionals in
the home improvement biz...
Having said that, it certainly is possible to make investments
that will produce a very positive return. But many, many
homeowner improvments do not do so. Heck, I have personally
viewed dozens and dozens of homes for sale where badly
thought out or implemented additions and "improvments" have
seriously eroded the desirability and value of the property.
There is an inherent conflict here:
* When you embark upon improvements based on resale, you
need to be very cold, objective and hard-nosed.
* When you embark upon improvements that you want to live
with, the considerations are very personal and subjective.
Those who wish to learn more would do well to study what
features the major home builders are adding to the houses
they sell. They know (don't guess) what add-ons maximize
the market value of the property.
--
|~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~|
| Malcolm Hoar "The more I practice, the luckier I get". |
| malch@malch.com Gary Player. |
| http://www.malch.com/ Shpx gur PQN. |
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
|
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