Housing Investment ?

[Scanner]

Okay, I posted this here for the times we all view our home as an investment.

I know they say kitchens and bathrooms you can make usually about 100% of what you put in, let's say a 10K bathroom upgrade will raise your home value by 10K. I have heard sometiems decks can be 100-150%. At least these were the rules of thumb precrash - decks were cheap "living space".

What about alternative energy sources like wind and solar? I had a local person who deals in windmills send me information and according to the stats he was throwing around that I would get my equity investment + 20-80%. . .So, if I put a 10K windwill/electric generator, it would raise my home value by 18K at the most.

You think this is true?

I am actually not wondering if this wasn't just sales talk. . .I can see a "power-station-home" being an attractive commodity, esp. in today's day and age w/ COL being so high.

[Mr Nice Guy]

From my naive eyes, it seems logical that you could get a higher return than what you put in due to the future savings on energy costs. Not to mention that before long, sustainable energy will be "in style" if its not already.

[rj.phila]

just to weigh in on your stats on home repairs, numbers i've seen put kitchens at 95%, bathrooms around 90%, and it goes down from there. i've never seen 100-150 quoted on anything.

ive thought alot about alternative energy, and shopped around-mainly solar panels. the big question is are the manufacturing costs going to drop, or not. its wierd; it seems like a market where supply and demand aren't dictating price, almost.

[bjl584]

I would say not true. Some may desire an alternative energy source, but others wouldn't want a house with a large windmill in the yard or solar panels on the roof. If could become a deterrent to selling the property. The trick would be to market it so that you could prove that the utilities are significantly lower, or better yet show that you are selling power back to the electric provider.

[MonkeyMama]

2 things:

I would avoid wind and solar because they can be very expensive to maintain. (MEaning, I personally wouldn't pay more). Likewise, our neighborhood is all Energy Star homes which are extremely efficient with much lower cost systems. For example, we don't have solar/wind or tankless hot water heaters or any of that stuff. Just newer/energy efficient models, and all our heat (gas) costs $240 for the whole YEAR. I don't see the point in investing thousands of dollars to whittle that down. Likewise, repair/replacement is much cheaper.

Secondly, this is a really regional question. People where I live do not pay 100% for improvements. In my neighborhood, the return is a big fat -0-. I would be a fool to think I Would get my money back on any improvements. So I can't give you any useful opinions there if your region is different. (HEre, land is so expensive that land is the only thing people really pay for. IT's like the house is incidental. California. I have many friends who paid WAY more for smaller fixers with an extra quarter acre of land. Likewise, some of my neighbors look like they spent six figures on fixing up their homes, but without more land than the other homes, they never sell for more than the more modest homes).

[Scanner]

MM,

While I don't think it's good practice to depend on home improvements as being an investment, IMO, one would be a fool to think that they aren't factored into the price.

You walk into my house right now. . .this is what you see. . .a run down bathroom, with tile peeling away around the toilet and bathtub and a very dated and poorly lit kitchen with worn out linoleum. Oh, no electrical outlets either in the bathroom (my sister noticed when she came over and tried to plug in her curling iron. . .I hadn't honestly noticed in 5 months)

Imagine this, women walk into the house leading the male around by the coattails. She walks into this and it's a "kaput sale". Take teh same house and put 20K into improvements and you may have a sale @ 20K over what I would be asking for it. The only reason I think this house sold to me is because I was the estate sales optimum buyer - a Divorced Dad with 3 boys who doesn't care about such things. . .I went past the bathroom and kitchen and went right down to the basement. (well, I did look a little)

What I am saying is, you do get something. What? Debatable and the topic of this thread.

If I have 50K to "spend" on home improvements. . .is alternative energy the best bang for the buck and demonstrating that it's a "minipower station" as someone posted or should I put the money into "less glamorous" energy saving investments and then if I ever did sell (no plans), just show them a years of utility bills. . .good point.

The males would typically love a minipower station (we like to outwit utility co.'s) but then again, they aren't usually driving the buying decision. They are usually only "Vetoers". . ."I ain't getting a house with no basement, no how! I don't care if it looks like a dollhouse." "This lawn is way too big to take care of." and so on.

[Scanner]

Okay, let me throw this conundrum at the forum from another angle.

I have a home that is in need of a lot of improvements. I am currently having to refinance the property to pay back Mom and Dad who bridged me the loan during my divorce (complicated by I needed a 6 month loan - they have a lien on the property and everything).

Okay,

Option 1. The Savings Advice Option.

Do nothing and just pay cash and homage to Dave Ramsey.

Option 2. When I refinance at 3.75% for 15 years, take some cash out. How much I am not sure. . .anywhere from $8500 to $30,000 I imagine I'll be able to take out for home improvements, if hte bank will let me.

Here is a list of what needs to be done:

1. Fuse box needs to be converted to circuit breaker box 200 amp.
2. Bathroom needs new tub (stained), new commode (stained), new tile/linoleum, and new vanity. The bathroom is very peculiar in that there is a window sill in the shower and the water has gotten behind there and warped the outside wall. . .so IMO, the whole wall needs to be replaced with cement board and glass block put there so it matches the outside asbestos siding. Also, there is no fan in the bathroom nor any GFI outlets.
3. Kitchen needs more lighting and new linoleum. Cabinets/drawers need some minor repair.
4. 2 pronged outlets and some outlets are ungrounded.
5. Needs a new boiler - I am already doing this through South Jersey Gas who converts you for 0%.
6. Will need a new roof here soon, if there aren't leaks already. It's a bungalow cape cod style house and roof.
7. There is no central air conditioning. Was thinking heat pumps/split units are optimal for my situation.
8. A couple of windows need replaced.
9. Needs some attic insulation and a thermostat fan
10. Deck needs repair.
11. The lawn is nothing great to look at. But I have no irrigation system to support improvements in this area.
12. I just upgraded the one phone line to TV, net and phone to FIOS, so that's good. (I modernized communications )
13. The chimney floo is rusted shut.
14. Just about every interior door in the house is delapidated
15. There are dead branches above my roof.
16. The 82 year old woman was into floral wallpaper in many rooms.
17. The laundry room is jerry-rigged in the following fashion - the laundry water goes out into a trash can, that's buried in the basement floor. . .the sump pump then pumps it out of the trash can into the wasteline.
18. The main exit sewage line is galvanized steel (it looks okay to me though)
19. No dishwasher
20. No garbage disposal.
21. I did restore the floors before I moved in - they are all hardwood - a mix of pine and oak - probably original w. the house in 1950. One room just has crappy carpet and plywood though - I use that for the toddlers room anyway.
22. The gutter guards could use some repair and/or updating.
23. I caught 4 mice so far.
24. It needs a giant windmill on the roof

I guess that's mostly it.

Do some cutting and pasting and give me a triage list taking in "investing" in mind.

[BuckyBadger]

Imagine this, women walk into the house leading the male around by the coattails. She walks into this and it's a "kaput sale". Take teh same house and put 20K into improvements and you may have a sale @ 20K over what I would be asking for it. The only reason I think this house sold to me is because I was the estate sales optimum buyer - a Divorced Dad with 3 boys who doesn't care about such things. . .I went past the bathroom and kitchen and went right down to the basement. (well, I did look a little)

I think that's the debate, though. It's not necessarily: mo improvements equals no sale, and $20k of improvements equals sale at original asking plus $20k. It could very well be that no improvements equals no sale, but $20k of improvements equals sale at what you were asking for in the first place.

At some point, improvements have to be made just to make a place sell AT ALL, rather than being made for any additional benefit.

[MonkeyMama]

But you missed my point - it's regional. So my experience sounds meaningless to you.

If you were my neighbor I'd say don't waste your money on improvements, and just sell it! It would sell in 5 minutes.

As such, I have nothing useful to add to this discussion. BEcause you are talking about a very different region - as most people probably are.

Seriously, I know people who would pay $700k for all the problems you describe, Scanner. They pay for the land. The rest is moot and can be fixed. Sounds a lot like the home my SIL paid $700k for...

[bjl584]

Okay, let me throw this conundrum at the forum from another angle.

I have a home that is in need of a lot of improvements. I am currently having to refinance the property to pay back Mom and Dad who bridged me the loan during my divorce (complicated by I needed a 6 month loan - they have a lien on the property and everything).

Okay,

Option 1. The Savings Advice Option.

Do nothing and just pay cash and homage to Dave Ramsey.

Option 2. When I refinance at 3.75% for 15 years, take some cash out. How much I am not sure. . .anywhere from $8500 to $30,000 I imagine I'll be able to take out for home improvements, if hte bank will let me.

Here is a list of what needs to be done:

1. Fuse box needs to be converted to circuit breaker box 200 amp.
2. Bathroom needs new tub (stained), new commode (stained), new tile/linoleum, and new vanity. The bathroom is very peculiar in that there is a window sill in the shower and the water has gotten behind there and warped the outside wall. . .so IMO, the whole wall needs to be replaced with cement board and glass block put there so it matches the outside asbestos siding. Also, there is no fan in the bathroom nor any GFI outlets.
3. Kitchen needs more lighting and new linoleum. Cabinets/drawers need some minor repair.
4. 2 pronged outlets and some outlets are ungrounded.
5. Needs a new boiler - I am already doing this through South Jersey Gas who converts you for 0%.
6. Will need a new roof here soon, if there aren't leaks already. It's a bungalow cape cod style house and roof.
7. There is no central air conditioning. Was thinking heat pumps/split units are optimal for my situation.
8. A couple of windows need replaced.
9. Needs some attic insulation and a thermostat fan
10. Deck needs repair.
11. The lawn is nothing great to look at. But I have no irrigation system to support improvements in this area.
12. I just upgraded the one phone line to TV, net and phone to FIOS, so that's good. (I modernized communications )
13. The chimney floo is rusted shut.
14. Just about every interior door in the house is delapidated
15. There are dead branches above my roof.
16. The 82 year old woman was into floral wallpaper in many rooms.
17. The laundry room is jerry-rigged in the following fashion - the laundry water goes out into a trash can, that's buried in the basement floor. . .the sump pump then pumps it out of the trash can into the wasteline.
18. The main exit sewage line is galvanized steel (it looks okay to me though)
19. No dishwasher
20. No garbage disposal.
21. I did restore the floors before I moved in - they are all hardwood - a mix of pine and oak - probably original w. the house in 1950. One room just has crappy carpet and plywood though - I use that for the toddlers room anyway.
22. The gutter guards could use some repair and/or updating.
23. I caught 4 mice so far.
24. It needs a giant windmill on the roof

I guess that's mostly it.

Do some cutting and pasting and give me a triage list taking in "investing" in mind.

You probably won't get a ROI doing everything on that list. Maybe ask a Realtor or a home inspector to prioritize the list for you? The electrical upgrade has to be up there on the list. The rest may just be cosmetic. Replace some rugs and slap a coat of paint on everything.

[mcfroggin]

You are overly optomistic on home improvements. The housing market is down, people are scaling back, and expensive home improvements are out. I wouldn't bet on even 80% return right now. Maybe it would be higher if you believe the market will improve greatly in years to come, but by then your remodel could be out of style.

[Scanner]

I don't think I am overly optimistic. I cited a range. You only saw 80% and figured that's what I was counting on.

I am only trying to figure out the best way to triage the list above. . .maybe an investment that was generating income is better than a bathroom, that's all.

And I am a contrarian. . .I do agree with you - because everyone is scaling back, that is usually when I make a move in teh opposite direction. Contractors for the above are a dime a dozen right now.

[BuckyBadger]

Personally I'd buy a nice house on regular power before I'd buy a crappy house with a windmill.

[Scanner]

Aye, you got a point there. . .cosmetics are important!

[Joan.of.the.Arch]

Are you wanting out of this house soon? Because it sounds as if you are wanting to make your decisions based on what will help you sell and at the higher profit. I don't think you need to be reminded to make the changes and improvements that you personally prioritize, not what you guess some future buyer might like-- The things that will make life easier, more comfortable, or otherwise more satisfying for you and your kids. Oh, and into the things that will preserve your house--like the new roof and the new wall & window in your bath.

By the way, our house was (still is!) a lot like what you describe. It was on the market for two years before we came along and picked up the bargain. Some of that stuff we don't care about at all. E.g., garbage disposal? No way; we don't send our compostables down the sewer! On the other hand I could not stand the giant floral wallpaper nor the mustard color fleur de lis wallpaper with both flocking and silver & gold foil! That had to go as did the old, old, old carpet.

I love that # 17 on your list! We had the much simpler old house laundry drainage system of the hose-end filtered by a nylon sock draining into a 5 gallon plastic bucket with its own nylon screen second filter, which then drained through holes drilled in the bucket bottom into a drain built into the basement floor! Can you believe these things pass an inspection?

A sense of humor helps in an old house. We chose to keep our "horrible" kitchen wall paper that looks like it has a motif of giant snails when I take my glasses off! We also kept our bathroom wall paper that looks like pink and silver fried eggs, even though I know it is supposed to be rushes and lily-pads. Really, I get a kick out of the campiness, and in both places these wall papers are still doing their practical jobs...plus they are scrubbable, so practical. Ditto the old vinyl floor in the kitchen which is identifiable late 1960's but still doing its job to protect the floor, even if it does have a small gouge here and there. (I'll always remember my kid's friend dropping an anvil, corner down, on it.) And the fabric covered old phone line running through the basement is quite the novelty. What the hey, it runs DSL for us and bugged out the eyes of the phone techs the one time they were in our house.