need advice ...ROI on Home upgrades / features


need advice ...ROI on Home upgrades / features
My sister lives in the SF bay Area, CA. She wants to upgrade her home with new kitchen granite, flooring, carpeting, bathroom tiles, marble entryway, additional new bathroom etc
She is wondering if "the upgrades" are a good investment ? and will they appreciate in time ? In other words if she is planning on spending $50,000 on upgrades, will this $50,000 appreciate at say 6% or would she better off investing in mutual funds ?
I have 2 important questions... 1.generally does get one's money back from these upgrades ? 2. Do the upgrades appreciate with the home ? ie if a home appreciates 6% a year in the SF Bay Area, CA would her upgrades appreciate as well ?
If you think this would bring in a good ROI, would you pls advise as to which materials to use ? What tiles, carpets, marble, granite are best for ROI and maintenance ?
She is totally ignorant with these things.
Any help would be highly appreciated.
Thanks Kim
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Don't know about the SF area, but in general, no.Other than the obvious issues of things like out-of-date heating, plumbing, electrical, or kitchen, don't expect to get your money back if even then. Buy for love, not money. If you want to upgrade something because you would like it, like a new kitchen, then do it. Just don't expect the property to magically appreciate by that amount.
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On 30 Nov 2006 11:31:26 -0800, snipped-for-privacy@yahoo.com wrote:

Unless the existing things are damaged and need replacing anyway, no. That's not to say that she shouldn't do the upgrade just because that's the kind of house she wants to live in, (although I wouldn't) but she shouldn't expect to recover the money.
Unless she already owns the building outright, the best use for $50,000 would be paying off the mortgage. (after any higher interest debt)
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snipped-for-privacy@yahoo.com wrote:

ALL studies show that expensive upgrades NEVER return the investment. Especially kitchens. Oh, and swimming pools.
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As others have posted, no.
Here are items that provide the best ROI:
1/ Painting 2/ New carpeting (neutral) 3/ Repairs of obvious, cosmetic defects (but not new roofs) 4/ Landscaping
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snipped-for-privacy@yahoo.com wrote:

Spending $50K on upgrades is likely to produce a negative return on resale.
Spending $10K on upgrades could very well produce an attractive return. Stick the rest in mutual funds or whatever. But you'd have to spend that $10K very wisely.
Generally speaking, the positive returns come from relatively low cost cosmetic upgrades (e.g. a coat of paint).
I have recently completed a fairly major kitchen remodel. However, with careful shopping and a *lot* of my own labor, I was able to do this for $7-8K. I firmly believe that I'll get that back (and some) if we sell.
If your sister doesn't have much of a clue about these things, she could do a lot worse than speak to a realtor. The good ones would be able to provide really good advice and may be willing to do so for free in the hope you'll give them your business if and when you do come to sell.
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I'd have to strongly disagree that upgrades are a loss and you will never get the money back. I've seen lots of articles by professionals that show that there are some upgrades that can in fact return more in resale value than they cost.
Some examples that can return 100% or more:
Adding a second bath to a home that has only one. Redoing an outdated kitchen Landscaping Paint
A classic example that, in most parts of the country, has little or no return:
Swimming pool.
There is a current show on cable, think it's HGTV, called My House is Worth What? They bring in an real estate agent/appraiser to go over houses that folks are thinking of selling to figure out what they are worth, and what changes they could make to increase the resale value. I've seen lots of suggestions where they've told them to do things like redo the kitchen for $40K, because it should bring $60K in resale. One owner was considering adding a garage, (the home didn;'t have one, similar homes did), and even the return on that was estimated to be over 100% on resale. You should watch the show. I've even been surprised. For example, there have been homes where the homeowners had recently spent like $70K on a kitchen, with granite, wood floors, top appliances, the works. The estimate was that they would get all the money back, and I think possibly even more.
Now, in the case of a kitchen, for example, it obviously makes a big difference in how old and dated it looks. I sure would't rip out a presentable 10 year old kitchen on the hopes of getting a positive return. But if it's 30 years old and looks it, then it could bring a positive return.
As for the upgrades continuing to appreciate with the house, in general they will.
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On 1 Dec 2006 07:16:28 -0800, snipped-for-privacy@optonline.net wrote:

If you, as the person living in the house, aren't willing to trade the $50,000 (or whatever) for the priviledge of living with the upgraded stuff, why do you think that whoever buys the house next will? And if you *ARE* willing to trade the $50,000 for the priviledge of living with the upgraded stuff, why do you *CARE* if the person buying the house next will?
--Goedjn
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Goedjn wrote:

I don;t see this as an either or. Many people, like the poster, when considering what they might choose to upgrade in their homes are interested in how much it could increase the resale value. If they are considering among several things they might like to do, it;s only reasonable to think about which of those would increase the resale value the most.
A lot of how much a house sells for is the impression it makes when people look at it. Your argument is like saying I have a used car to sell, it's dirty, but I don;t mind it, so why should I spend money to have it cleaned before selling it?
And if you *ARE* willing to

I would care because I'd like to get as much of my money back at resale as possible. With some upgrades that happens and with others, it's well known that you will get little if anything. Or even worse, some "upgrades" can actually decrease the value.
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snipped-for-privacy@optonline.net wrote:

And most of those articles are written by professionals in the home improvement biz...
Having said that, it certainly is possible to make investments that will produce a very positive return. But many, many homeowner improvments do not do so. Heck, I have personally viewed dozens and dozens of homes for sale where badly thought out or implemented additions and "improvments" have seriously eroded the desirability and value of the property.
There is an inherent conflict here:
* When you embark upon improvements based on resale, you need to be very cold, objective and hard-nosed.
* When you embark upon improvements that you want to live with, the considerations are very personal and subjective.
Those who wish to learn more would do well to study what features the major home builders are adding to the houses they sell. They know (don't guess) what add-ons maximize the market value of the property.
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Malcolm Hoar wrote:

Most of the ones I've seen have not been written by anyone connected to the home improvement business. Most have been written by real estate professionals.

No question in some cases, you can decrease the value. Like taking a 3 bedroom, enlarging one bedroom by eliminating another one. Or simply painting the house some awful colors.

There can be some conflict, but I don't see it that extreme. There is still a broad range of selection in terms of what you do, which materials, colors, etc that you can choose from and still have it come out about the same in terms of resale value.

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