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Planning for resale - which property developments will pay a return?

 
pollinator
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Attention real estate gurus!

I've come to the conclusion recently that I will not be staying here on my WA homestead for various reasons, the main one being that my property while absolutely beautiful doesn't allow for some of the things I want to do and I'd really like to be in a place that has more water and a better growing season.

My question is this - what property developments/finishes increase the value of the property proportionately to how much is invested into them? I had been planning on doing some things, like more gravel and perimeter fencing a couple acres inside my 20 for the house & garden & small livestock that I have. But now I'm thinking it may not be what I want to do. Now that I've officially decided I'm not saying here forever, I don't want to spend $2000 to finish my fencing project only to turn around and sell it a year or two later and find that it didn't increase the value and I would have been better off financially putting that $2k into paying down the mortgage for more equity (or putting said $2k into something that might increase resale value by $4k, etc).

A couple pertinent details:

1. I am debt free except about $45k on my land and a couple thousand on a student loan which ideally will both be paid off prior to moving but who knows. It is realistic that I could have it all paid off within three more years or before I move.
2. I feel strongly that I need to focus on balancing the most effective "finishes" to my home while I'm here, with being aggressive about paying down as much debt as I can so I can get the most for my money when I move.
3. I've determined that it will most likely be 2-4 years before I am able to move, although it could be up to a decade. I should know by the end of next summer, I think. I know for sure I'm going to leave, I just don't know when.
4. My home is unfinished, and I am hoping to get it finished within the next 2 years. I still have to do mostly window/door trims, backsplashes, and I have to put in septic as well as finish the exterior siding (about80% done now) and paint it all. I may also connect it to grid electric, but I'll talk to a local real estate agent before I do that to make sure I'd be able to recoup the cost.
5. I don't have to worry about FINDING a buyer, which is awesome, since my neighbor has already told me he'll buy my house no matter what. I just want to be efficient about maximizing the value.

I ask this because where I'm looking to move (in Missouri) I'm noticing that much of the time, the value of finished properties with outbuildings, cross fencing, etc. is much lower than what it would cost to buy raw land and build all the same improvements new, which tells me that the property improvements don't necessarily increase the resale value proportionately. I haven't looked around here locally to compare, but I would assume it's the same in other places?
 
pollinator
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Not a real estate guru, but just met with one for dealing with a parent's house.

Even though you have a buyer, check with a realtor.  If the neighbor needs to obtain financing, there are certain things that have to be in good working order for the bank to work on the loan (at least in Virginia). We have flooring issues, window sills, insulation and gutter issues that HAVE to be taken care of before any type of sale can occur. Usually kitchens and bathrooms fix ups give the most back to you.

Maybe ask your neighbor what things they might not even care about being done if it doesnt conflict with legal requirements. Then again, if it is a move that is a long way off, it could change if the same neighbor isnt still there or not financially able to still buy at your price.

Some landscaping effort can be worth it to get people in the house, but not a problem if you already have a buyer.

Hope you find what you are looking for!
 
pollinator
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Landscaping
Painting the walls,
Painting the outside so that everything looks accent
Accent walls, interior  
Polishing the Floor
Plants and stuff
Make it look clutter free, for viewing (so storage, live out of a suitcase).
New curtains/plate sets/etc

Mostly just make it look like a million bucks.

Next would be bathroom and kitchen, latest fixtures.

Next people like to hear that expensive roof/porch/siding has just been redone, but you don't get to see the best return on money.
 
Bethany Dutch
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So - ok I know that a lot of the finishes type stuff (trims, repainting, etc) can add a lot of curb appeal itself and make a house more likely to sell, but it actually adds more value in and of itself? I thought most of that is just the curb appeal that makes people more likely to actually buy, as opposed to something that actually adds value.
 
S Bengi
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Curb Appeal cost  $5,000 but you can ask for $30,000 more so 600% profit
Landscaping/Painting/etc
Dressing up the front door by painting it a contrasting color
Replacing old exterior hardware like door knobs
Making the entryway symmetrical
Installing outdoor lighting
Planting flowers and plants
Installing a new mailbox
Adding shutters


New Bathroom Cost $10,000 you can probably ask for 15,000 more so 50% profit
new Kitchen Cost $15,000, you can probably ask for $20,000 more so 33% profit

New Roof cost $25,000 but you can only ask for $30,000 for only 25% profit
 
Tina Hillel
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According to the realtor, we can put some sweat equity in (and of course money) to boost the appeal, but unless it is major landscaping there is no real money back. Unless that is what attracts your buyer vs them thinking "what a dump, I will offer less." Especially since we can either make a bunch of trips to the dump or cough up the money to get a dumpster and save time and work.

I like our realtor as she seems pretty realistic.
 
Bethany Dutch
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Tina Hillel wrote:According to the realtor, we can put some sweat equity in (and of course money) to boost the appeal, but unless it is major landscaping there is no real money back. Unless that is what attracts your buyer vs them thinking "what a dump, I will offer less." Especially since we can either make a bunch of trips to the dump or cough up the money to get a dumpster and save time and work.

I like our realtor as she seems pretty realistic.



See that's kinda what I was thinking. Fresh coats pf paint, etc. are nice but when you have someone who will buy it no matter what I'm not sure how much that stuff matters. He's not buying it because he wants my house, he's buying it as an investment and because he wants more of a buffer to make sure he doesn't end up with weirdo neighbors.

Like I'd intended on doing a faux/veneer stonework backsplash behind my fireplace, so I have the wall painted but bare (not textured or anything) and I'm wondering... if I invest in the $750 to do the veneer, will it increase the actual value of my place by that much? If I finish my perimeter fencing which will cost me an additional $2500, will it raise the market value by $2500? If I do pretty landscaping as opposed to basic utilitarian finishes to the yard, will it increase the value of my place enough to make the cost and time/labor worth it? I still need to tile my bathtub surround - if I use fancier "nice" tile will it make a difference vs just the basic cheap stuff? And so forth.

I guess in the long run I should just have a realtor come out and take a look and talk strategy, but I don't think I'll do that until I have a better idea of when I'm going to move. If I move within 2 years, I will approach things very differently than if I move in 7-10.
 
steward
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My humble opinion is to do as little as possible that still makes it livable for you and reasonable to sell.  Finishing window trim and making it "finished enough" is good.  Landscaping and most of the other stuff probably won't return half of what you put into it.  I'm guessing fencing will pay back about $5 on your $2500.  With things like repainting, fences, outside structures, landscaping, etc there's a very good chance the new owner will say "Why did they put the fence here?  Now I need to move it.  And why did they paint the house blue?  I'll offer less to cover my cost to repaint a neutral color."

The only risk in my mind is that if you leave it in too unfinished a state, your neighbor will be in a position to low-ball you.

The only things I can think of that will pay back more than you invest in them are those few things that currently keep the place from being livable or attain financing.  

As a side note, we sold our house ourselves.  Saved a ton of money on realtor fees but it did consume about 20 extra hours of our lives.  That's not always possible with a relocation but if you know the buyer already....
 
Bethany Dutch
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Mike Jay wrote:My humble opinion is to do as little as possible that still makes it livable for you and reasonable to sell.  Finishing window trim and making it "finished enough" is good.  Landscaping and most of the other stuff probably won't return half of what you put into it.  I'm guessing fencing will pay back about $5 on your $2500.  With things like repainting, fences, outside structures, landscaping, etc there's a very good chance the new owner will say "Why did they put the fence here?  Now I need to move it.  And why did they paint the house blue?  I'll offer less to cover my cost to repaint a neutral color."

The only risk in my mind is that if you leave it in too unfinished a state, your neighbor will be in a position to low-ball you.

The only things I can think of that will pay back more than you invest in them are those few things that currently keep the place from being livable or attain financing.  

As a side note, we sold our house ourselves.  Saved a ton of money on realtor fees but it did consume about 20 extra hours of our lives.  That's not always possible with a relocation but if you know the buyer already....



The low-balling thing is basically what I want to avoid, so YES that's the big thing. I don't care about making it pretty (unless I do end up staying another decade which I doubt) but I do want to use my time wisely to invest as much of my time/sweat equity to maximize the equity I get out of it in the end when I sell. I intend to ask for fair market value, so i want to maximize that with minimizing my time and money inputs.

And yeah I think we'll do it ourselves, doesn't make sense to use a realtor when we can just hammer it all out ourselves. nice to know it will only take about 20 extra hours!
 
Mike Jay
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And that 20 extra hours was because we were selling it to the general public.  If you sell to the neighbor it will be less
 
S Bengi
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Curb appeal can increase the entire value of your house by 6% so from $200,000 to $212,000.
Nothing else covers the cost much less gives a profit.

The only time you can make a profit on renovation is if the house was a dump/fixer upper or not paying labor cost will allow you to, because material is usually only 30%-50% of the total project cost.
 
Tina Hillel
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We were told to go cheap as most people want to decorate according to their taste anyway. For instance, the kitchen cabinets look bad. We were concerned we would have to replace.  Asked realtor if we should at least paint them. Her suggestion was to just spring for matching knobs.  The money to replace wouldnt get a good return in this case and neither would the money or work to repaint these.  For appliances in bad shape, she recommended craigslist for cheap better looking stuff without collapsed doors.

Its a tightrope between cheap and livable for you and making people want the house!
 
pollinator
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It really depends on where you are, here not much changes the price of a house, even new kitchens/bathrooms make little difference, they certainly do not make their money back. Condition of house and outbuildings does make a difference as do new roofs, doors/windows but most people will redecorate as soon as they move in anyway so are not looking at paint jobs.

I have yet to figure out exactly what changes house prices here we're looking to move and it seems very arbitrary how much a house is up for but basic condition and positioning seem to be most of it.
 
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4. My home is unfinished, and I am hoping to get it finished within the next 2 years. I still have to do mostly window/door trims, backsplashes, and I have to put in septic as well as finish the exterior siding (about80% done now) and paint it all. I may also connect it to grid electric, but I'll talk to a local real estate agent before I do that to make sure I'd be able to recoup the cost.



I think those are great priorities.

The the most important thing (for everyone else) when we went to sell our home and land was not having a septic system and a flush toilet.  

It turned out that folks couldn't get a mortgage on the house since we didn't have a septic system.

The house was definitely 'unfinished' in other ways, needed a new roof, new siding but was on the grid and plumbed to municipal water...we bought it that way and lived in it comfortably but resale value was quite low.  What we sold it for was hardly more than the value of the forty acres alone, although that enabled the most wonderful couple to buy it so was worth it in the end.  

At one point I thought we could just hook up any old toilet and drain it out back off the hillside and that would satisfy the lookers.  Many just couldn't get around having an outhouse or a 'bucket' toilet even if it was indoors...they needed something to flush!
 
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Bethany, I think you are on the right track getting advice. Since you have some time it might be a good idea to interview and get advice from a number of realtors to help understand your local market. Also going about and attending open houses in your area for properties on the market is a good way to educate yourself on the market in which you are planning to sell in and to chat up realtors about the market and selling strategies.

Not sure if I understand the relationship with the neighbor who says they will buy the house no matter what. If the neighbor is buying to gain control of a neighboring property, that adds incentive to them, but circumstance change so I suggest moving forward as if the neighbor will not actually buy your house. Is the neighbor planning to rent your house out, or move into it and sell their house?  If that’s the case, why not do the deal sooner than later with an agreement to rent back to you while the septic is being completed etc?

My belief is that any plans predicated on achieving a particular asking price in the future needs to be tempered with caution. I know a number of mid-Atlantic homeowners who purchased houses in 2008 who are still underwater on their mortgages due to the downturn that occurred and other local factors (neighborhood, type of house, housing supply and local environmental concerns). They could sell their house tomorrow no problem except they would need to pay off $80k of their mortgage to walk away without defaulting. My advice is to not spend any more going forward than you can afford to lose and take advice that doing x = $$$ with a sack of salt.

 
pollinator
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I really think that this depends on location. I'm selling and around here, people want it pretty and clean. All the houses are pretty much the same size, so you need to try to make your house stand out. Houses are sparkling clean and staged when put on the market. People here have no vision. I suspect that rural properties are almost completely opposite. If it has potential, and it usable that would be the selling points I'm looking for.

But it is true, that getting a mortgage for an alternative property is going to be difficult. The lender don't want to get stuck with those properties if you walk away from your loan. VA backed loans are even stricter, everything has to be to code, no as-is properties.
 
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As S Bengi alluded to, bathrooms and kitchens sell houses.  Anything you can do to make those better pays a return.
 
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Bethany Dutch wrote: The low-balling thing is basically what I want to avoid, so YES that's the big thing. I don't care about making it pretty (unless I do end up staying another decade which I doubt) but I do want to use my time wisely to invest as much of my time/sweat equity to maximize the equity I get out of it in the end when I sell. I intend to ask for fair market value, so i want to maximize that with minimizing my time and money inputs.

And yeah I think we'll do it ourselves, doesn't make sense to use a realtor when we can just hammer it all out ourselves. nice to know it will only take about 20 extra hours!



I would find out if the potential buyer will have to get a mortgage or loan?  That will eliminate a lot of work and money.

A realtor is unnecessary though using a lawyer or a title company to draw up the papers would be in your favor.  Not the potential buyer's lawyer because then things go their way.
 
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