Category Archives: Home Improvements

Home Improvements, Investment Strategies

Hey, What’s my Garage Worth?

When it comes to home improvement projects, one of the key considerations is the return on investment (ROI). The ROI measures the financial return or profitability that can be gained from a particular project. It essentially evaluates the value or gain generated from the investment made in improving or renovating a property.

Garage additions and renovations have historically shown positive ROI in many regions. The actual ROI can vary depending on factors such as location, the size and quality of the garage, and local real estate market conditions. Because of these factors, it’s important to note that there truly is no tried-and-true mathematical formula that precisely calculates ROI for home improvements – there will always be a variance.

To calculate the return on investment (ROI) for a garage project, you’ll need to consider the cost of the project and the expected increase in your property’s value as a result of adding the garage. Here’s a simplified formula:

ROI = (Net Gain / Cost of Project) x 100%

Cost of Project: This is the total cost of building the garage. Make sure to include all expenses such as materials, labor, permits, and any additional costs related to the project. Let’s assume the cost of your 22 x 23 garage project is $30,000.

Net Gain: To calculate the net gain, you’ll need to estimate how much the addition of the garage will increase the value of your property. Let’s assume the garage adds $40,000 to the value of your home.

ROI = ($40,000 – $30,000) / $30,000 x 100% ROI = ($10,000 / $30,000) x 100% ROI = 33.33%

In this simplified calculation, your estimated ROI for the two car’ garage project is 33.33%. This means that for every dollar you invested in building the garage, you can expect to gain an additional 33.33 cents in home value.

Keep in mind that real estate markets can be complex, and the actual ROI can vary greatly based on many factors including local market conditions and the specific features such as the size and the quality of construction.

Expert Tip: The only official way to calculate the net gain of the improvement is to determine the home’s value after the improvement is made. There is a unique type of appraisal called an “as-completed appraisal” where an appraiser will look at your renovation plans and your current home value and determine how much value the improvement will add to the property value upon completion. 

This type of appraisal is  normally completed if the home owner is  applying for a “renovation loan” and is based on the equity of the home , however this type of appraisal  can also be used by the home owner to see exactly how much value you are getting from your new improvement.

Remember, every home improvement project is unique and has its own set of variables. Your garage serves as more than just a place to park your car; it can be a valuable asset that adds both functionality and appeal to your property. Whether you’re looking to sell or simply want to understand the worth of this space, evaluating the value of adding a garage is an important step in maximizing your home’s overall value.

 

 

 

Green Home, Home Improvements, Investment Strategies, Real Estate Market, Real Estate Market Analysis

Getting an appraisal when you are already in contract

What happens in a scenario where the buyer decides to have an appraisal performed after the home is already under contract? What are the possible outcome if an appraisal comes in above the contract price or below it?

 If  the Appraisal is above the contract price: 

If the appraisal comes out higher than the contract price, it may be seen as a positive outcome for the buyer. It means that the property is valued higher than what they agreed to pay, potentially indicating that they got a good deal.

However, since the buyer has already agreed to purchase the property for $320,000, they are typically obligated to honor the contract. The buyer may still proceed with the purchase at the agreed-upon price or renegotiate with the seller based on the new appraisal value. Renegotiation could involve trying to lower the price or requesting additional concessions from the seller.

Appraisal below the contract price

If the appraisal comes out lower than the contract price, it can create some challenges for the buyer. The lender (if involved) might only be willing to provide a loan based on the appraised value rather than the contract price.

In this case, the buyer may face several options: a) Proceed with the purchase as planned, covering the difference between the appraised value and the contract price with additional cash from their own funds. b) Renegotiate with the seller to lower the purchase price based on the appraised value. This renegotiation is typically subject to the willingness of the seller to adjust the price. c) Terminate the contract if there are contingencies in place that allow for this, such as an appraisal contingency.

The buyer may be entitled to have their earnest money deposit refunded if they decide not to proceed with the purchase due to the low appraisal.

It’s important to note that the specific consequences and available options may vary depending on the terms outlined in the purchase agreement, any contingencies present, local real estate laws, and the willingness of both parties to negotiate or modify the contract. Consulting with a real estate professional or an attorney would be advisable in such situations to fully understand the implications and potential outcomes.

Before you make a home purchase

It important do research about your neighborhood. Try to find similar homes in the same price range so you can see how your house compares in quality and size etc. And even if there is no mortgage involved, it is always prudent to have an appraisal on a property you are interested in before you enter into a legal agreement. Purchase agreements should always have a contingency in the event the property appraisal comes in below or above your offering price. An appraisal could save you the loss earnest or deposit money, paying too much or even a possible breach of contract.

Home Improvements, Investment Strategies

Ways to Increase Value

What are the Top ways owners can increase their property value or generate revenue from their properties? In this two part blog I will give a 7 ways on how owners can increase their property value or generate revenue from their properties:

  1. Make improvements: Making improvements to the property can increase its value and make it more attractive to potential buyers or renters. Examples of improvements could include upgrading the kitchen or bathrooms, adding square footage, or improving curb appeal.

Let’s say a homeowner has a property that was built in the 1980s and hasn’t been updated since. The kitchen has outdated appliances, the bathrooms have old fixtures, and the carpet is worn and stained. The homeowner decides to invest in making improvements to the property by renovating the kitchen, upgrading the bathrooms, and installing new flooring throughout the property. After the renovations are completed, the homeowner hires a professional appraiser to evaluate the property’s value. The appraiser takes into account the improvements that were made and compares the property to similar properties in the area. Based on this analysis, the appraiser determines that the property is now worth $50,000 more than it was before the renovations were made.

In this example, the homeowner was able to increase the value of their property by investing in renovations and upgrades. The improvements not only made the property more attractive to potential buyers, but they also increased the property’s value in the eyes of the appraiser.

  1. Rent out a portion of the property: If the property has additional space, such as a basement, garage, or extra bedroom, it can be rented out to generate additional income.

Let’s say a homeowner has a property with a detached garage that is not being used. The homeowner decides to rent out the garage as a storage unit to generate additional income. The homeowner cleans out the garage, installs shelves and locks on the doors, and advertises the space for rent on local classifieds websites and social media.

After a few weeks, the homeowner finds a tenant who is willing to pay $150 per month to use the garage for storage. The homeowner and tenant sign a lease agreement that outlines the terms of the rental, such as the payment due date and the length of the lease.

In this example, the homeowner was able to generate additional income by renting out a portion of their property that was not being used. By turning the unused garage into a rental unit, the homeowner was able to generate steady monthly income without having to make any significant investments or changes to the property.

Keep track of your project costs with these free project cost templates.

  1. Convert the property into a rental property: If the property is not currently being used as a rental property, the owner can consider converting it into one. This can generate steady monthly rental income and potentially increase the property’s value over

time.   Let’s say a homeowner has a property that they inherited from a family member but they already have a primary residence. The homeowner decides to convert the inherited property into a rental property to generate monthly rental income. The homeowner hires a property management company to handle tenant screenings, lease agreements, and maintenance issues.

After making some minor improvements to the property, such as repainting the walls and upgrading the appliances, the property is listed for rent. After a few weeks, a tenant is found and they sign a lease agreement for a monthly rent of $1,500.

In this example, the homeowner was able to generate steady monthly rental income by converting the inherited property into a rental property. This can be a good option for homeowners who have a property that is not being used or who are looking to generate additional income without having to sell the property.  To keep track of your  rental income, Zillow offers Rental Income and Expense Forms and Tools  to down load and use for free. You can get them here.

End of Part 1.

Home Improvements

What are the best home improvements that yield the highest return to the home’s value?

There are several home improvements that can increase a home’s value, but the specific improvements that yield the highest return on investment (ROI) can vary depending on factors such as location, the current state of the housing market, and the type of home. Here are some common home improvements that tend to have a high ROI:

There are several home improvements that can increase a home’s value, but the specific improvements that yield the highest return on investment (ROI) can vary depending on factors such as location, the current state of the housing market, and the type of home. That being said, here are some common home improvements that tend to have a high ROI:

  1. Kitchen remodel: Upgrading appliances, countertops, cabinets, and flooring can all improve the look and functionality of the kitchen, which is often seen as the heart of the home.
  2. Bathroom remodel: Updating fixtures, adding a new vanity or shower, and replacing old tile or flooring can make a big difference in the appearance and functionality of a bathroom.
  3. Outdoor improvements: Adding a deck, patio, or landscaping can improve curb appeal and create an attractive outdoor space for entertaining.
  4. Energy-efficient upgrades: Installing new windows, insulation, or energy-efficient appliances can not only save on energy costs but also make a home more attractive to buyers who are interested in eco-friendly living.
  5. Adding square footage: Adding an extra bedroom or bathroom or finishing a basement can increase the home’s living space and overall value.

It’s important to keep in mind that not all home improvements will yield a high ROI, and it’s important to consider the cost of the improvements compared to the potential increase in home value. Home Guide – Estimate Project Costs

 Additionally, it’s always a good idea to consult with a local real estate agent or home improvement professional for personalized recommendations based on your specific situation. What is the true cost and return on my project.