# Does Remodeling make Economic Sense...



## bigbuckeye (Feb 18, 2011)

You need these fixes to make a house more livable... and they will make your house sell... the question is do you ever get your money back from them?


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## fourcornerhome (Feb 19, 2008)

Where you gonna live ? You buy a car to get around , and when your done with it , it's lost value


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## Mike Finley (Apr 28, 2004)

Some remodeling is updating - redoing an existing bathroom or kitchen. This is maintenance, it is keeping the house current with the competition it just keeps the value of the house current

Some construction is addition of living space - finishing a basement, an addition - that is increasing the value of the house against the competition

Replacement windows? Ha, rarely does anything but deflate a homeowners wallet. If the windows were just terrible, falling out of their frames, then you've done maintenance, just like remodeling


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## RCT (Jan 5, 2010)

The only way your going to get ALL of your money back from remodeling is if you are just buying materials and doing the work yourself. Also, If you got the house cheap enough in the first place their may be room for profit after you've remodeled and sold it.

If you pay an "average" market price for the house and hire someone to fix it up, I would think you'd be lucky to get even 75% of your remodeling costs back. (The tv shows are full of crap!)

Please correct me if I'm wrong, just my $.02


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## thom (Nov 3, 2006)

We humans desire more than the minimum level of sustenance. We work so we can live first but then, we work to thrive. My own house was never about return of capital, it was and continues to be about living the way I want to live. 

Put housing in the perspective of life. We don't eat just beans because they're cheap, we don't wear sackcloth because it's cheap, we don't take the bus instead of owning a car because it's cheap, and we don't live in hobbit holes because they're cheap.


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## Bill Z (Dec 10, 2006)

bigbuckeye said:


> You need these fixes to make a house more livable... and they will make your house sell... the question is do you ever get your money back from them?


There have been a couple of decades that created unrealistic expectations about "investing" in a home. We all hear the question, "Will I get my money back" and we take it for granted there's logic behind it. There is not.

Think about asking the Starbucks guy, "If I buy your coffee, will I get my money back?"

Ask the banker, "If I pay you interest for 20 years, will I get my money back?"

Ask the travel agent, "If I go on this cruise, will I get my money back?"

Ask the surgeon, "If you do the operation and I die, will my wife get my money back?"

You get the point. *It's a ridiculous question* in almost any other field than home improvement. The buyer is going to "use" the product just like the coffee, the cruise, or the interest. Why do we let them get away with expecting the work we do should be free?

Maybe a shorter answer is, *"Why the fx#& should you?"* :laughing:


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## bigbuckeye (Feb 18, 2011)

*Inflation...*

with inflation on the horizon it is a very reasonable question... Work today and tomorrow inflation could well be "worth it" beyond a basic ROI model... At the end of the day quality of life issues are the key... live there... love it... use it... Any time I paint residential or commercial it is all about pride in ownership, and protection:thumbup:


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## Electric_Light (Nov 25, 2007)

You didn't say what the house is used for. Remodel, nice appliances, etc are ways to win tenants or justify higher rent. You can't afford to leave rental properties vacant, but you can't win tenants unless it gives them the value they expect. (i.e. if its in a slightly less convenient location, they're going to expect lower rent, or better conditions for same rent).

You might not be able to raise rent enough to ever recover the cost of renovation, but if you can't get tenants in, you're in trouble.


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## tgommels (Nov 3, 2010)

bigbuckeye said:


> You need these fixes to make a house more livable... and they will make your house sell... the question is do you ever get your money back from them?


 Have you ever checked out Remodeling Magazine's Cost Vs Value Report? I use that frequently with prospects.
I'd include a link but I'm a newer member. Just google it for the 2010 report and it will pop come up.


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## E-Centric (Aug 30, 2007)

Bill Z said:


> There have been a couple of decades that created unrealistic expectations about "investing" in a home. We all hear the question, "Will I get my money back" and we take it for granted there's logic behind it. There is not.
> 
> Think about asking the Starbucks guy, "If I buy your coffee, will I get my money back?"
> 
> ...


I'd have to agree with the sentiment... That, the question itself is incorrect, but the premise behind it is relevant. The same kinds of questions are asked in the green building realm -- "How long will it take for me to recoup costs for these solar panels?" is the most common.

Taking the same logical approach as Bill Z, why don't we ask the same question to our current power providers? It just doesn't make sense, right? It's a service(well, utility) that we pay for, use, and _SHOULDN'T_ expect a return on as an investment.

Then what *DO *we expect from it? My expectations are simple: I look for a reasonable cost and quality service. I would be pretty secure in saying that those 2 topics are really what most folks are looking for, and it's how we differentiate ourselves in this industry(at least the bright ones do).

As was mentioned in other posts, if the project is by definition an investment(rental, buy/sell), the logic doesn't change, just the approach to managing costs and quality do.
--E


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## CJA (Jan 26, 2011)

My answer to the question is: 

"I don't know. I'm a contractor not a real estate agent. I can only guarantee a quality product not the value or return that it will bring should you sell."


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## Bweikel (Feb 20, 2011)

cja said:


> my answer to the question is:
> 
> "i don't know. I'm a contractor not a real estate agent. I can only guarantee a quality product not the value or return that it will bring should you sell."


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## KAP (Feb 19, 2011)

*Roi*

It is a very valid question as different types of remodeling yields different returns.

If you live in an area with homes that are decently maintained, and your roof/siding has seen it's better years, and you are thinking of selling, you would want to know how much VALUE your home would increase to the surrounding market if you made that improvement. This would give you a basis for ROI. 

Appraisers will INCREASE your assessment, if your property is above neighborhood standards and DECREASE it if it is below. If remodeling did not have a ROI associated with it, there would really much less need for an appraiser in the first place.

Remodeling Magazine compiles Cost vs. Value reports every year for every region on remodeling projects. Depending on the region, a ROI for a kitchen, for example, might be 60-110% of the cost involved and they provide average cost for that region for each type of remodel. This ROI will INCREASE if your pricing is less than the average price for your area. 

Instead of having to say that you don't know, you can easily forward clients to third-party resources like the Cost vs. Value reports that track this info, and if they are thinking of selling, they should consult a realtor on how much the expected remodel will increase the value of their home for their market.

Like other investments, it also depends on how long you plan to keep that investment. Time, for the most part, increases your ROI.

Best of luck... 8^)


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## BradingCon (Dec 17, 2010)

Though I am not sure this is the nature of the question, I will throw my .02. I rarely am even asked about homeowner return when I work on remodels. 99% of my customers just want to do the remodels to A) Fill a need in their home B) Create a more comfortable and visually appealing living quarters. This is where I focus my sales efforts.

The small amount of people that do inquire about returns, I am just honest with them. I am a remodeling contractor and I do not have the expertise to comment on such things. If they find out exactly what they are looking for (by talking to family, real estate agents, etc) then we can make it happen.


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