Is now the good time for remodelling?

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cletus_IHB

cletus_IHB

New member
My wife and I have been thinking of remodelling our home. Our kids moved out, and we'd like to do some work to destroy the damage they did, and adjust our home for our current needs. Plus we figure, 5 years from now when we retire, we'll get that money back and then some.



We're a bit tight on cash, so we were thinking a HELOC might be worth considering right now... we're still just tossing around ideas, curious if anyone else is thinking the same right now and if they have any advice.



Delroy
 
[quote author="C Delroy Spuckler" date=1242728509]My wife and I have been thinking of remodelling our home. Our kids moved out, and we'd like to do some work to destroy the damage they did, and adjust our home for our current needs. Plus we figure, 5 years from now when we retire, we'll get that money back and then some.



We're a bit tight on cash, so we were thinking a HELOC might be worth considering right now... we're still just tossing around ideas, curious if anyone else is thinking the same right now and if they have any advice.



Delroy</blockquote>
Do not do it, especially if it will require using HELOC funds. If you feel like you must do something, keep it small and inexpensive.
 
What's your current LTV? I wouldn't go HELOC unless you intend to pay it off in less than a year. A fixed rate second maybe, but only if you have a ton of equity in your home and can comfortably afford the payments on the second. The article about the NY Times economics journalist is very sobering about taking on debt.
 
When you are tight in cash the HELOC may alleviate your immediate cash need but how are you going to pay for a higher mortgage later when you are tight with your cash now and 5 years away from retirement. You passed the prime of your career where you will have an increase in salary. You have a fixed income and it is a gamble dealing with HELOC during this economic uncertainty.
 
[quote author="C Delroy Spuckler" date=1242728509]My wife and I have been thinking of remodelling our home. Our kids moved out, and we'd like to do some work to destroy the damage they did, and adjust our home for our current needs. Plus we figure, 5 years from now when we retire, we'll get that money back and then some.



We're a bit tight on cash, so we were thinking a HELOC might be worth considering right now... we're still just tossing around ideas, curious if anyone else is thinking the same right now and if they have any advice.



Delroy</blockquote>


By all means, Cletus, proceed... get rid of that antenna for starters.



<img src="http://bp0.blogger.com/_wKYvyEtLvYk/R2mHw55qm1I/AAAAAAAAAYI/MbpwPwIAQSo/s320/cletus-MNB.jpg" alt="" />
 
By all means, Cletus, proceed... get rid of that antenna for starters.



<img src="http://latestfilings.com/images/smileys/thumbup.gif" alt="" />
 
<img src="http://bp0.blogger.com/_wKYvyEtLvYk/R2mHw55qm1I/AAAAAAAAAYI/MbpwPwIAQSo/s320/cletus-MNB.jpg" alt="" />



Here is a visual for you. Your antenna is still good until June. You will need a converter box.
 
Welcome to the IHB. You have made two monster errors in your calculation, maybe three.



[quote author="C Delroy Spuckler" date=1242728509]My wife and I have been thinking of remodelling our home. Our kids moved out, and we'd like to do some work to destroy the damage they did, and adjust our home for our current needs. Plus we figure, 5 years from now when we retire, we'll get that money back and then some.</blockquote>


You are figuring wrong.



Most home improvements historically return 20 to 50 cents for every dollar invested, past 8 years being the exception. If I were you I'd bank the twenty cent figure unless you have multiple rooms that need to be rerocked and textured because your kids had a rave when you were out of town or something. Even in this kooliad infused site (fueled with bad data from the past 8 years):



<a href="http://www.demesne.info/Improve-Your-Home/Improvement-ROI.htm">http://www.demesne.info/Improve-Your-Home/Improvement-ROI.htm</a>



The best they can do is .85 for every 1.00 invested. Remodeling is a loser in a normal market. This market is way worse than normal.



<blockquote>We're a bit tight on cash, </blockquote>


There's never a bad time to remodel if you can afford it ? and here's the second dealbreaker. You can't afford it.



Your home will likely be worth 20-80% less in five years (compared to today) when you go to sell it - 20% if you live in Bakersfield, 80% in Newport. Plus you have about 40 million baby boomer friends who are planning on pulling the same trick.



You should do remodels as a lifestyle choice that you can afford, not as an investment proposition, because the investment angle is dead for a decade. The mantra you?ll hear repeated over the next decade is ?Don?t over-improve your home ? you can?t get the money back when you sell it.?
 
[quote author="tkaratz" date=1242733296]What if the question was more specific, for example, "Are the costs associated with remodeling my home at historical low?"</blockquote>


The metrics won't change. Best case a dollar spent on remodeling will yield you 85 cents and you can kiss off 20% at a minimum over the next five years, so yeah........spend a dollar today, and get fifty five cents in five years. IF you?re lucky.



Do not overpay for milk!
 
Sorry if I sound a bit ignorant... but I watch some cable TV renovations shows all the time where they discuss certain renovations being worth your money, and certain not...?



Is this just cable hyping some stuff, or are there certain things that would make sense to do?



Oh and that antenna... you guys do realize those converter boxes still need antennas, right? As a matter of fact, HD is much more sensative to reception issues... ask anyone who has bought a digital TV if they can get over the air without an antenna. I figure I'll keep it and sell it as an upgrade :)



Delroy
 
[quote author="no_vaseline" date=1242734452][quote author="tkaratz" date=1242733296]What if the question was more specific, for example, "Are the costs associated with remodeling my home at historical low?"</blockquote>


The metrics won't change. Best case a dollar spent on remodeling will yield you 85 cents and you can kiss off 20% at a minimum over the next five years, so yeah........spend a dollar today, and get fifty five cents in five years. IF you?re lucky.



Do not overpay for milk!</blockquote>


Okay, assuming your remodel is based upon a lifestyle preference and assuming that home being remodeled is the home you will die in, is this the best time to find a low price on materials and labor?
 
[quote author="tkaratz" date=1242735881][quote author="no_vaseline" date=1242734452][quote author="tkaratz" date=1242733296]What if the question was more specific, for example, "Are the costs associated with remodeling my home at historical low?"</blockquote>


The metrics won't change. Best case a dollar spent on remodeling will yield you 85 cents and you can kiss off 20% at a minimum over the next five years, so yeah........spend a dollar today, and get fifty five cents in five years. IF you?re lucky.



Do not overpay for milk!</blockquote>


Okay, assuming your remodel is based upon a lifestyle preference and assuming that home being remodeled is the home you will die in, is this the best time to find a low price on materials and labor?</blockquote>


Sounds like alot of people are thinking like I am (ya, I know scary thought...)



<A HREF="http://www.cnbc.com/id/30806031">As More Homeowners Stay Put, Remodeling Starts to Pick Up</A>
 
[quote author="C Delroy Spuckler" date=1242735117]Sorry if I sound a bit ignorant...</blockquote>


Please don?t feel that way ? you were smart enough to ask the question (and brave enough to return), I figured you deserve a straight and direct answer.



<blockquote>but I watch some cable TV renovations shows all the time where they discuss certain renovations being worth your money, and certain not...?



Is this just cable hyping some stuff, or are there certain things that would make sense to do? </blockquote>


Yeah. Them. I'm sure you're speaking of "Flip that House" and it's ilk. Always ask "Did they film them between 2001-2007?" Because if they did, it's Fantasyland ? except it?s where Dreams go to Bury You till your Dead.



Ignore them. They didn't have to deal with three foreclosures on every block like every neighborhood in SoCal will before this thing cycles out. We have a couple of local examples <a href="http://www.irvinehousingblog.com/forums/viewthread/842/">like this one in Costa Mesa that has been documented from TV to the courthouse steps.</a>



Go back and watch the reruns of "This Old House" from the early and mid 1990's - not only do you get to see a true craftsman at work (Norm Abrams) you get to see folks make remodels that don't kneecap them when they go to resell them.



And with all that said, you gotta live in the place. What exactly is wrong with it? And are you handy?



[quote author="tkaratz" date=1242735881]Okay, assuming your remodel is based upon a lifestyle preference and assuming that home being remodeled is the home you will die in, is this the best time to find a low price on materials and labor?</blockquote>


Let me give you an answer to the question you didn?t ask, but I wish you had:



I bought a house for (get this) lot value MINUS demo costs (it was less than a new subcompact car) and rehabbed it in 1996. I couldn?t do it today in the same neighborhood if you gave me the house/lot for free AND the demo fees for working capital.



And to answer the question you asked:



Absolutely not, but if you can afford it and you have the money, who cares?
 
BTW, sounds like a few people are taking a comment out of context. I said we are a bit short on cash...



Here's the deal, this is a temporary situation. The young'uns just graduated college. My wife and I decided as a gift to them we would pay off their student loans, so that they can start their life debt free and worry about getting a good job and being established professionally.



For the next few years, we're going to work on paying off their loans. We had alot of money in stocks and don't feel comfortable right now pulling eveyrthing out to pay for their loans... we felt it was best to pick a short term timeframe (3 years) to average out of the market and pay their loans off.



This is why we are tight (that and my wife's shopping habits ;) ).



Delroy
 
[quote author="C Delroy Spuckler" date=1242736702]BTW, sounds like a few people are taking a comment out of context. I said we are a bit short on cash...



Here's the deal, this is a temporary situation. The young'uns just graduated college. My wife and I decided as a gift to them we would pay off their student loans, so that they can start their life debt free and worry about getting a good job and being established professionally.



<strong>For the next few years, we're going to work on paying off their loans.</strong> We had alot of money in stocks and don't feel comfortable right now pulling eveyrthing out to pay for their loans... we felt it was best to pick a short term timeframe (3 years) to average out of the market and pay their loans off.



This is why we are tight (that and my wife's shopping habits ;) ).



Delroy</blockquote>


Oh, and now you are opening up a new can of worms, just ask Cayci and her college education for kids philosophy.

I think it's actually a good time to remodel, if you intend to enjoy your work rather than expect a return out of it. Prices are not as low as you might think though. In many ways when people have little work and not much prospect for more, they tend to NOT give you a really great price. I wish you nothing but good luck, it sounds like you deserve to enjoy a house that fits for you and your wife.
 
[quote author="C Delroy Spuckler" date=1242736702]BTW, sounds like a few people are taking a comment out of context. I said we are a bit short on cash...



Here's the deal, this is a temporary situation. The young'uns just graduated college. My wife and I decided as a gift to them we would pay off their student loans, so that they can start their life debt free and worry about getting a good job and being established professionally.



For the next few years, we're going to work on paying off their loans. We had alot of money in stocks and don't feel comfortable right now pulling eveyrthing out to pay for their loans... we felt it was best to pick a short term timeframe (3 years) to average out of the market and pay their loans off.



This is why we are tight (that and my wife's shopping habits ;) ).



Delroy</blockquote>


I don't think I misunderstood one bit, but thank you for clarifying my point - if you can't pay it out of current funds, you shouldn't do it.



The seemingly innocent act of holding your home till retirement is a lead pipe cinch drain on your Net Worth - doing major remodeling in todays market and borrowing money to do so will simply add fuel to that fire. The big question you need to ask yourself is "Does it cost me more per month to rent, or does it cost me more per month in what I lose in value of my existing home?"



I am making rational, unemotional calculations of what you are proposing. There is no way to spin it positive.
 
[quote author="tmare" date=1242737020] I wish you nothing but good luck, it sounds like you deserve to enjoy a house that fits for you and your wife.</blockquote>


Only if they can afford to pay for it. They sound over-leveraged as it is. When did I turn into Suze Orman? Must be Troopers fault.
 
[quote author="no_vaseline" date=1242737397][quote author="tmare" date=1242737020] I wish you nothing but good luck, it sounds like you deserve to enjoy a house that fits for you and your wife.</blockquote>


Only if they can afford to pay for it. They sound over-leveraged as it is. When did I turn into Suze Orman? Must be Troopers fault.</blockquote>


What makes you believe I am over leveraged?



Delroy
 
[quote author="C Delroy Spuckler" date=1242767273][quote author="no_vaseline" date=1242737397][quote author="tmare" date=1242737020] I wish you nothing but good luck, it sounds like you deserve to enjoy a house that fits for you and your wife.</blockquote>


Only if they can afford to pay for it. They sound over-leveraged as it is. When did I turn into Suze Orman? Must be Troopers fault.</blockquote>


What makes you believe I am over leveraged?



Delroy</blockquote>


Your own words "Mr. short on funds" and "borrowed to pay my kids student loan off" and "fixing to retire" and "holder of a net loser portfolio of stocks and a house". I suggest you not be passive agressive with me if you want to continue on this forum, or I will stop being nice. You likely won't like that.



Plus, you're being evasive.



What is wrong with your house? Are you talking about a $5,000 paint and carpet and a couple of doors deal, or are you talking about $100K in custom kitchens.
 
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