Increasing Property Value: Does & Don'ts - Posted by Kris

Posted by Kiersten on July 10, 2001 at 19:50:08:

There’s a difference between “adding value” which was the topic and a selling point. Certainly a pool is a great selling point, especially if you are wanting to buy a home only with a pool. But when I look at what “adds value” I consider it something that increases my value above what it cost me–putting a profit in my pocket–at the least, recouping my cost to stay in a competitive market. Pools don’t do that. Sure, if the pool cost 50K it will obviously get an adjustment in value higher than 8K, but I guarantee it won’t be 50K. I think the point of the question was “what can I do that may cost me 2K but get me 3K in my selling price”. Screening in an already existing patio is a good one–it almost always gives you more value in an appraisal than it cost you. Call any appraisal and ask them what the #1 improvement is that does not recoop its cost and they will say POOL. That was my point. When I have an appraisal come back with a value that is under the asking price, it’s almost always a pool issue. I’ve seen it many times and that was all I was saying! I agree with you that a pool is a good feature, but if we really look at whether or not adding a pool “added value” for the seller, the answer, IMHO, is no.

Increasing Property Value: Does & Don’ts - Posted by Kris

Posted by Kris on July 10, 2001 at 03:19:20:

I was watching the news the other day and a section on the news came on about real estate property value and what additions and upgrades increase the value of you home, and what upgrades donnot. They mentioned things like installing a new kitchen will increase the value of a property; things like having high ceilings or installing an expensive ceiling fan or,(contrary to conventional home owner opinion) installing a pool, does not. A new pool only increases the owners maintenance expense, he inherited when he purchased the home.

My point being, can any of you well seasoned Real Estate investors out there give us a rundown on the type of upgrades/additions in a home that actually do (and is supposed to)increase the properties value, as well as those seemingly improvments only the owner (and maybe his agent) “think” add to the value of their home. This is very important especially for us newbie investors that come in contact with these type of sellers or their agents who try to sell us an overpriced home based not just nessesarily on comps in the area, but also by those irrelevant type improvements made to the home (ie a pool, a garden, etc.)

This information is great ammunition for us novices out there on the real estate battle field. It will be a great tool to keep us from purchasing an overly priced property.

Thanks.

Kris

Re: Increasing Property Value… what I do - Posted by Lori Samson

Posted by Lori Samson on July 10, 2001 at 12:18:27:

I liked what LOR had to say (male or female?) and I do agree with most everything. I do just some really practical things on both rehabs or lease options. I will normally always change out all the ceiling fans. I will spend about $100 apiece for living room, dinning room and kitchen ceiling fans. I will spend from 40-75 on bedrooms. The master being the most important. I put up wall paper borders. I have a guy who will put them up for about $10 a roll. Spend about 150-200 per room and with a few thousand you have made a blah white house kick rear! I always add a knoch out shower curtain (hids that so-so bath tub). It’s funny to have then NOT ask if we will regrout the tub but they will ask if they get to keep the shower curtain! Usually if they default they will leave the extra stuff you put there. I save all the little cute room trash cans, flower vases and knick knacks they leave behind in evictions or houses I get and I put vases on the mantles and trash cans in the bath rooms of the empty houses I am going to show.

I have a list of of the extras I like to budget into every deal to make it sell for a few thousand more and rent for an extra 50-75 a month. Women will want a house with those wall paper borders vs. the plain white walls. Even if they didn’t like the border we picked out it gives them more vision for the house.

I had about 6 houses at one time that I was lease optioning out and I had enough time to do some of the fru-fru on three of them but didn’t have the time for the rest and I watched how people reacted to the ones we ‘fixed’ and the ones we left ‘as-is’. Big difference. I got the three I did do work to go like hot cakes and the ones I didn’t I was back over there late into the night getting it done before the next open house!

I don’t like to plant flowers I buy the big pots and dump two bags of potting soil and two six pks. of flowers into it and place near the front door. Wala! Done with landscaping! I have done more from time to time but we are in Texas and it’s going to burn up from the heat in a few weeks anyway!

Lori

Lori

Best improvements to increase value… - Posted by JT - IN

Posted by JT - IN on July 10, 2001 at 11:37:48:

Folks:

The best improvements that you can make to increase your property values are: Buy low and Sell high!

Buy a property with great terms, on L/O or subject-to, or a great price, that you can pass along with creative financing to a new T/B, at a maximized price. This will make you more money than any pool, new kitchen, bath or a velvet lined potty seat!

The most profitable improvements are made between your ears, in knowing how to structure these type of deals, for maiximized profits. And this education is a heck of a lot easier than doing a rehab, too!

Just the way that I view things…

JT - IN

Best improvements to increase value… - Posted by JT - IN

Posted by JT - IN on July 10, 2001 at 11:36:09:

Folks:

The best improvements that you can make to increase your property values are: Buy low and Sell high!
Buy a property with great terms, on L/O or subject-to, or a great price, that you can pass along with creative financing to a new T/B, at a maximized price. This will make you more money than any pool, new kitchen, bath or a velvet lined potty seat!

The most profitable improvements are made between your ears, in knowing how to structure these type of deals, for maiximized profits. And this education is a heck of a lot easier than doing a rehab, too!

Just the way that I view things…

JT - IN

Re: Increasing Property Value: Does & Don’ts - Posted by Lor

Posted by Lor on July 10, 2001 at 11:12:43:

Hi Kris,

I can give you some tips for what I do in a Seller’s market, where I live on the left coast. I only make improvements that add value, never do repairs. This means I don’t put on new roofs, update electical etc. (a reverse ground is no biggie - we have full disclosure laws in CA). The one time I added a roof, I also turned the roof into a deck to add value. (the house now had an ocean view).

Rather, just interior and exterior paint, refresh the kitchen, new carpet and landscape. Landscaping can simply be having Home Depot roll out a new lawn and plant a maple tree in the middle of it. Reading this board I never hear anyone mention landscaping but this is why I think it’s important. A couple of years ago I worked for three months one summer for the top real estate agent at Alain Pinel in Menlo Park. I took the job just to learn a little more about real estate. I learned that 90% of the time buyers make up their mind to purchase within 30 seconds of pulling up to the curb. We also staged the homes, meaning we brought in furniture, artwork and fresh flowers. The bathtub has to be spotless, if it can’t be cleaned, have it re-surfaced.

In my area, remodeling the kitchen will add 120% value, bathroom - break even. All other remodels are money losers.

Remember though that every part of the country is different. My suggestion is to go to open houses in your area. I do this to keep up with housing design trends, like kitchen islands, granite countertops, exterior paint colors etc. It is easy to do inexpensive knockoffs of new trends. For instance, I noticed a few years ago that everyone was putting in granite countertops which I couldn’t afford, so I bought 12"X12" granite tiles for 1/10th the price and I had them installed using only a 1/8th" grout seam. I then traded horseback riding lessons to the tile layer’s daughter so didn’t have to pay for labor.

Realtors are bored sitting at open houses all day so you can ask them endless questions. If you see a contractor building a house, stop by at lunchtime and talk to him. I do this all the time and sometimes get a personal tour! Good luck, real estate investing can be a lot of fun.

Re: Increasing Property Value: Does & Don’ts - Posted by Lazaro

Posted by Lazaro on July 10, 2001 at 09:28:39:

Sorry, but I disagree with that a pool does not add value. In my opinion it does add value to the home. At least here in Florida it does.
Cordially,
Lazaro

nice post! NT - Posted by Anne-ND

Posted by Anne-ND on July 10, 2001 at 14:41:04:

NT

Re: Best improvements to increase value… - Posted by Kris

Posted by Kris on July 20, 2001 at 02:58:22:

Buying “subject to”… I hear that alot in this business but never actually new what it meant. Buying subject to what?

Kris

Re: Increasing Property Value: Does & Don’ts - Posted by Kris

Posted by Kris on July 12, 2001 at 01:26:14:

So I take it your in the L.A area from your post about working with an agent in Menlo Park. So you saying the biggest boost to a homes value is the kitchen? There was a list of things on the news that they said added to the value and they also listed those upgrades that didn’t. I wish I could remember them, but a new kitchen was definitely at the top of their list. I for get what else. Could adding an xtra bedroom/bath add to the value as well.

Still trying to sort this out. Thanks for your help.

Kris

About the value of that pool… - Posted by Eric C

Posted by Eric C on July 12, 2001 at 07:50:28:

Hi -

Several years ago, I put in a large pool at a very expensive house in an even more expensive neighborhood. Following construction, just to be on the safe(er) side, I decided to replace the wooden privacy fence around the pool with a masonry one.

Afterwards, there was a need to appraise the property. All the property inspectors and the appraisers gave more value to the new masonry fence than they did the pool itself. (in fact, one actually gave the new pool a negative value)

The fence cost about one-tenth what the pool did.

Just my .02

Yours,

Eric C

PS - Should also be noted that I recently entered into a purchase agreement for a new house (personal) which will be extensively remodeled. It has a large pool in very good shape which I will probably fill in. Too much trouble – I’d rather have the new landscaping.

By the way, have you priced pool maintenance lately? My average is about $100 plus or minus per month year 'round. And there is always something that breaks each year or so – usually large and expensive. My pool guy does very well.

Re: Increasing Property Value: Does & Don’ts - Posted by Kris

Posted by Kris on July 12, 2001 at 02:00:45:

Maybe it does in your area. All I’m saying is what I saw on the news the other day and was told that adding something like a new pool doesn’t really add much to the value of the property, according to the news report. They said that it adds more to the expense of property maintenance. Thats just from the report not from me. Now maybe it does add to your property value in fla and if thats the case then thats good for you home owners and investors out there. I’m not sure if that is much the case for every stated though.

Re: Increasing Property Value: Does & Don’ts - Posted by BT (FL)

Posted by BT (FL) on July 10, 2001 at 11:54:15:

I my area a pool does add value. The drawback is when
a pool costs 15k to install and it only adds 8k to the value of the home upon resale.

BT (FL)

Re: Increasing Property Value: Does & Don’ts - Posted by Anon

Posted by Anon on July 12, 2001 at 10:58:37:

Menlo Park is near San Francisco, not LA.

Re: Increasing Property Value: Does & Don’ts - Posted by Cathryn

Posted by Cathryn on July 10, 2001 at 20:23:14:

It’s now mid-July in North Central Texas, the temperature for the next two months will be 100 degrees plus, and I would KILL for a large mud puddle. This would not be true if I lived in Minnesota.

How about this? Talking to the seller “Gee, pools require a lot of maintenance. A lot of buyers don’t have the time or the money. I think it’s more a liability than an asset. I might have to fill it in.We’ll have to knock a few thousand off your asking price because of it…”

To the buyer: “Your very own pool. Wonderful at the end of a long day, great for the kids. It’s one reason I have this house priced 15% over market…and worth every penny!”

Marketing, it’s all marketing…LOL

Re: Increasing Property Value: Does & Don’ts - Posted by Lazaro

Posted by Lazaro on July 10, 2001 at 18:00:47:

I would not say to go build one to sell a home. That was not my idea. But if you find a house with a pool you should not walk away because it has a pool. That is what I meant.
Cordially,
Lazaro

EXACTLY . . . - Posted by Kiersten

Posted by Kiersten on July 10, 2001 at 15:44:00:

I’m a lender in FL and YES, there’s value but it is NEVER the cost of the pool. If you spend 15K on the installation and think you can add that into your sales price when you go to sell, your home will not appraise! I see this all the time and sellers just don’t get it! Your 8K is right in line for a pool–regardless of how much was spent!

Re: EXACTLY . . . - Posted by Lazaro

Posted by Lazaro on July 10, 2001 at 17:58:33:

First, I didn’t say to install one to sell the home. But if you buy a home with it already that home has added value. As far as $8k for any pool I believe is VERY inaccurate to say. Are you going to tell me a pool $50k is only worth $8k. Some pools are larger and have other add ons that make it worth more. I will say you will never get back all your moneys worth but it also depends on the size and add ons with the pool. But I will not go out and build a pool just to sell the home. I think that would not be smart. But I will buy a home with a pool if the price was right.
Cordially,
Lazaro

Re: EXACTLY . . . - Posted by Brent_IL

Posted by Brent_IL on July 10, 2001 at 17:49:09:

In the Western suburbs of Chicago, I’ve seen several in-ground pools filled with dirt because the owners didn’t want the expense of the upkeep and/or the financial liability associated with having every kid within blocks using the pool.