Any RE agents here?

[Flatbutt1]

Or maybe a financial person could advise me. I'm trying to determine if the renovation I have been planning makes financial sense or not. Over the years there have been two re-fi's so I'm having a little difficulty figuring what I have in this house based on principle and changing interest rates.

Any tools or guidance on this is appreciated.

Tom

[Milu]

As a starter try looking at:
Current sales value of the house + cost of renovation subtracted from the value of the house after renovation.
You can safely assume the cost of the renovation will be a lot more than you budget for.

[GDSOB]

It makes sense if you do not expect to get more than the going rate for your size house in your neighborhood.

Your current investment in the house + rennovation cost < after repaired market price = OK deal. The market isn't getting any better soon, so you might want to leave a little margin if you have to sell soon.

Many rennovations pay off over the long haul, but if you are looking at recouping your costs in a couple of years, you might want to look at moving or scale down the project.

I see alot of overimproved houses that the owners expect unrealistic prices. While they might have nice features and amenities, the neighborhood will never support the value.

On the other hand, if you own a small or outdated house compared to the rest of the neighborhood, you may benefit from an addition or upgrades such as flooring or countertops. Location does matter.

Watch out for the RE agents, I hear they are all evil.

[911Rob]

Garth makes good sense!

I'm a licensed REALTOR, businessman and a compulsive renovator of many personal homes.

One thing I realized after becoming a realtor..... a buddy asked me to give him an idea of what his house was worth. It was a rev property that I knew the area very well. I told him on the phone what he could expect to get for the house. He called me back later and said him and his wife had decided to sell and he'd like to list the home. I said great, I'll do the docs and be over the next day.

He called back a couple minutes later and asked me if I shouldn't look inside the home first???? I felt sooooo stupid; I'd never seen inside!

This brought me to a sudden realization that I had personally over renovated homes in relation to their hoods many times. Don't do it. The home must match the area or you will lose the investment.

It happens with cars and it happens with houses...... we spent all this money on this house because we thought we'd never sell it; but.......

Now, it also depends on what renovations you are talking about and the condition of your home? my two cents; yet again!

[Flatbutt1]

Originally Posted by 911Rob

Garth makes good sense!


Now, it also depends on what renovations you are talking about and the condition of your home? my two cents; yet again!

Well technically its a renovation but I'd be re-building to the original footprint. The house is old and grandfathered to code so I can't sell it as is(the foundation is shot). However the renovation price is way to high. I can't do that kind of debt at my age. Plus I doubt seriously that I could recover the cost if I do sell the house. It is small, old and outdated(kinda like me). I can't afford to raze and rebuild either. I just don't know what to do


Current value due to its condition +renovation price <<< than what I could probably get on the market.

[GDSOB]

Originally Posted by Flatbutt1

Well technically its a renovation but I'd be re-building to the original footprint. The house is old and grandfathered to code so I can't sell it as is(the foundation is shot). However the renovation price is way to high. I can't do that kind of debt at my age. Plus I doubt seriously that I could recover the cost if I do sell the house. It is small, old and outdated(kinda like me). I can't afford to raze and rebuild either. I just don't know what to do


Current value due to its condition +renovation price <<< than what I could probably get on the market.

Sorry to hear that. Might be a situation where you just want to cut your losses. I'm sure you could sell it "as is" as long as you disclosed the foundation issues and it would sell at a highly discounted price to market. This issue is what you have in the property- hopefully you aren't in too deep or haven't cashed out on a ref.

Could be the definition of a money pit...

[Flatbutt1]

Originally Posted by GDSOB

Sorry to hear that. Might be a situation where you just want to cut your losses. I'm sure you could sell it "as is" as long as you disclosed the foundation issues and it would sell at a highly discounted price to market. This issue is what you have in the property- hopefully you aren't in too deep or haven't cashed out on a ref.

Could be the definition of a money pit...

I've been here 26 years. Kinda got stuck after the divorce BUT it is paid for . So I guess I could sell as is, take the equity and run.

Oh I've also been told that it is prolly a "teardown". New owner likely would raze and rebuild. But oh baby I imagine I would take a HUGE hit on price.

[GDSOB]

That's a better situation than I thought. It is worth something and you can cash out, or stay. I'd put minimal money into that house as long as I owned it. The money is in the lot.

[Flatbutt1]

Originally Posted by GDSOB

That's a better situation than I thought. It is worth something and you can cash out, or stay. I'd put minimal money into that house as long as I owned it. The money is in the lot.

Cool, thanks for the validation. Yes indeed the lot is valued 4X versus the structure.

[911Rob]

Garth is making good sense again!!!!

I'd get some professional blueprints done up by a home draftsman, including a lot plan, floor plans and a nice color rendering of what the home could be; then market the dream!

Don't build it though; you'll just go backwards in dollars..... ($$$) Brackets!

There's value in a grand-fathered footprint.... go with that.
Good Luck buddy

[Flatbutt1]

Originally Posted by 911Rob

Garth is making good sense again!!!!


There's value in a grand-fathered footprint.... go with that.
Good Luck buddy

Intruiging thought, thanks!

[GDSOB]

Or you could target market to the foundation repair guys...

[Flatbutt1]

Ha! I suppose in a few more months they'll be getting hungry.

[CRH911S]

I got into an older home on a treed quarter acre. The renovations were extensive but to keep costs down I didn't deviate from the as-built. Replaced all water, sewer and electrical. Replaced insulation, vapor barriers and sheetrock for most of the house. The kitchen and bathroom were completely remodeled. The downside is the forced air heater. It's 35years old and the previous owners replaced things that wore out to the point that it's a new heater...this includes the heat exchanger. Each year I keep hoping it dies so I can't replace it but my heater guy says it's good-as-new and as efficient as the new units. I'm presently replacing the viynal siding with cedar which isn't too expensive and really gives the little house a lot of character and street appeal.
Prior to purchasing the house I had an engineer look at the foundation because I was mainly concerned, not so much for code compliance, but if it could support an upstairs. The roof on my house is capable of an additional 1100sq/ft of living space. I was surprised to hear that the foundation was adequate even though the type of foundation isn't used anymore and that there are several ways to bring it up to code. It just depended on how much money I wanted to spend.
My little house is my retirement home and I wanted it to be functional and efficient. It's about 20 mins from downtown Anchorage and 5mins from hard core wilderness and some of the best cross country ski trails on this planet. Drs and hospitals are close by as are the newest malls and shopping centers.
Ever thought staying put might be in your best interest?

[RANDY P]

An appraiser would be a good person to consult for this. May not be free, but neither would be a RE agent - they'd assume you'd try to list.

Appraiser would be able to find houses in the area with similar upgrades and give accurate assessments based on overall conditon or effective age.

be prepared to shell out some cash though, around $300-$400 - but you can talk their ear off afterwards. Even get hypothetical pricing based on future add-ons and what not.

rjp

[fintstone]

I think you are comparing apples to oranges. If the rennovation you are contemplating is to retain existing value (foundation), that puts it in a whole different light. Especially if you intend to stay in the home.

[Flatbutt1]

fint,CRH...yes I have considered staying here and may have no choice but to do that since the house cannot be sold for full value as is
. But to go into debt for $100K now,this close to retirement is difficult for me to manage. It would be a repair more than a renovation, to keep it as is, just updated, therefore the resale value would not be enhanced much by the renovation costs.

[CRH911S]

flat, I don't know what the laws are in your state but in AK, Anchorage to be more specific, the assessor includes at least three examples supportive of their valuation for a given year. To verify the accuracy of their examples I visited several of the properties cited and I have to admit that they were in the ball park. In fact, if anything my home is a little underassessed. So having an appraisal done sounds okay but spending the money to do so seems to accomplish very little except to tell you what you already know.

Maybe Wayne can lend us a hand here. He's got the rent vs owning down pretty solid so if you could supply him with some numbers I'm sure he'd come up with something pretty solid that makes a lot of sense. Factoring in the sale of your home vs renting vs fixing what needs fixing and so on it would be interesting to see Wayne's analysis of the situation.

Home repairs of 100k on the eve of retirement would scare me too.