Is now the good time for remodelling?

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What I have read numerous times is that replacing windows with new energy efficient returns the most for the investment. Typically, it's around 95 cents and the tax break is back. Next in line are kitchen and bath as long as you don't overspend on them, it's about 85 cent return per dollar spent. However, that diminishes as the improvements age and no longer are brand new.
 
There are other reasons to remodel other than trying to make a profit when you sell the house. You might want the fancier kitchen or whatever, or to spend less money on your heating/cooling bills. But remodeling your home to sell it for more almost never works-especially in a declining market, like we are in now.
 
All of that is true, and what I was asking is what OP had in mind.



Putting a new roof on your house might yeald 80 cents on the dollar, but you have to do what you have to do. If this is the case and OP can't afford to pay for it............he probablly can't afford the house any more and should sell now before the market correction we are in robs him and his family of what's left of thier equity.
 
How about you give us specific details and numbers...

How did u pay for your house, how much is it worth now, how much cash reserve do you have, how much income do you have now, how much retirement income will you have, how much are the student loans, how long do you want to stay in the home, how much do you anticipate the remodel to cost, how much will you do yourself ?



That, or cut your atitude or you will go down in flames and not get any useful answers



But in short if you can afford it and want to do it because you want to improve your lifestyle, go for it.



If you want to do it to ad value to your home, don't because most likley I won't give you the return you expect
 
[quote author="no_vaseline" date=1242768934][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>


[quote author="no_vaseline" date=1242768934]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.</blockquote>


Slow down there Mr. Internet Toughguy... take a deep breath here before you threaten me with an IrvingHouseBlog beatdown. I realize this might be your schoolyard and you might be their bully, but just ask for my damned lunch money... no need to shake a fist at me.



I was asking a legitimate question in this thread, and you provided speculation to my situation (most likely based on your unhappiness with your own life, and need to put others down). Your speculation was wrong, and I was just trying to call you on it, because it was not backed up by any facts, and might cause others to answer incorrectly. While I know you might enjoy laughing at others who made bad financial decisions, I hate to say I am not one you will probably find much joy laughing at.



Let's please take a step back here and be civil. No need for anyone to "stop being nice".



[quote author="no_vaseline" date=1242768934]Your own words "Mr. short on funds"</blockquote>
Correct, I am short on funds. As I mentioned in my previous post, it is a short term thing caused by my wife and my desire to do something nice for our children. To remodel a house you need real money, not equity or an account with money in it. I don't have money sitting in cash tagged for this. Most of the money we had in cash we have already applied to downpay our children's college loans. There is a difference between being "short on funds" and "leveraged". Had you read my previous post and absorbed it, you would have realized the reason I am short on funds because we are taking on (what is for us) a large short term loan obligation to thank our kids.



[quote author="no_vaseline" date=1242768934] and "borrowed to pay my kids student loan off"</blockquote>
I did not say I borrowed to pay off my kids loans. Here's the deal, we told our kids growing up we would pay their way through B.S. in any instate public school. We saved (cash) for that so that we would not need to take a student loan out. My oldest son went to UCLA (engineer, not Asian) got his B.S. and continued on to get his masters. Our original agreement was he would pay for that, he had zero debt after his B.S., the loan was for his masters. Likewise, my daughter went into a specialty where it made more sense for her to go to a private school (USC). The loan was to cover the difference in tuition. Both our kids graduated with good grades, and so we felt as a token of appreciation we would surprise them by agreeing to take over their student loans. We know our kids are out on their own now, and so our cost of living will drop. We felt we can cover these loans in roughly 3 years, but that it would require some belt tightening for us short term, and that my wife would go back to work until we pay the loans off.



[quote author="no_vaseline" date=1242768934]"fixing to retire" </blockquote>
Why does "fixing to retire" mean "leveraged"? Fixing to retire means my kids moved out, I've got my savings in check, and we're considering what our next step in life will be. Its not I'm gonna retire tomorrow, its "hey, my priorities in life are changing, and The Mrs. and I are probably ready to pursue other goals in life".





[quote author="no_vaseline" date=1242768934]"holder of a net loser portfolio of stocks and a house". </blockquote>
I would find it hard to believe anyone who has money in the stock market right now has not seen depreciation in their assets. Again, this does not mean I am leveraged. As I said, my belief is the stock market has been underperforming and over the course of our loan, will probably go up. Rather than sell stocks at a depressed price, to pay for either my kid's loan or my house, one option we are exploring is taking a loan out since interest rates are at a very favorable rate. As I said in my previous post, one thought is to dollar cost average out of my stock portfolio to pay off any loan, rather than selling it all right now when I believe things are artificially low. Additionally, one has to consider the tax consequences when selling stock, so stock is not like this big giant piggy bank I should tap into arbitrarily.



[quote author="no_vaseline" date=1242768934]Plus, you're being evasive.</blockquote>
In what way am I being evasive? When there was some comments about my "tight on cash" comment, I provided some followup on that... comments which you chose to ignore or misinterpretted. I followed that up with this post which includes more information onto my situation.



The reason I am asking on this thread... debt is something I'm not overly familiar with. 25 years back when I bought my house, I guess I was naive and put 20% down and did a 30 year fixed. If you look at interest rates, obviously this was a bad time to get a loan, and a few years later I refinanced into a 30 year fixed with a larger downpayment. I've lived in the same house for roughly 25 years. I have no car loans. My home loan is a token payment, and I have a good amount of equity. My house is modest by today's standards. My problem is, for the next few years I will be paying down my kids' loans so most of our salaries will be going there. So we'd like to find some money for a short term loan to allow us to remodel and enjoy our new life... additionally we realize since our home is 25 years old, selling it in the future in its current state will probably be difficult... linoleum just isn't in today, and we have resisted the urge to travertine our entire house like everyone else did in the past 10 years.



[quote author="no_vaseline" date=1242768934]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.</blockquote>


As I said, my kids moved out. Our home for the past 20 years was focused around our kids. We no longer need a house focused around 2 kids. Our lifestyle is changing as well. The house is also 25 years old. Yes, one thing we are thinking of doing is upgrading the kitchen... my wife is into cooking, and now that we have the time, she'd like something where she can do this more often and more comfortably. We are also looking at reflooring. Now that we don't have kids running in and out of the house, we are thinking of replacing our outdated brick floors with some carpet.



Anyways, that's my situation... like I said, I'm not too familiar with debt and what options are available. Since I have a fair amount of home equity (and that would also allow for a tax writeoff) that was potentially one option. I assume there are other people on here who might be in a similar situation and gone through some thinking.





There, is that better?



Delroy
 
^

i like Delroy Spuckler



<img src="http://images.ibsrv.net/ibsrv/res/src:my350z.com/get/forum/images/smilies/bowrofl.gif" alt="" />



IMO if you want to improve your home and can afford to do it then go right ahead. however i would not expect any significant return on investment within the next 5 years.
 
Cletus, don?t count them thar chickens before they hatch. For each positive future scenario you present that will pan out, we can present a more likely one that won?t. Instead of creative financing, I suggest using the KISS approach. KISS = Keep It Simple, Stupid. (No offense intended.) If you have the cash to make your improvements, do it. If you don?t, do not do it. It sounds like you are banking on some serious recovery in stock and home prices. If you only intend to stay put for 5 years anyway, why not sell now, use any proceeds to pay off the student loans if that?s where you really wish to put your money ? and go downsize to something that fits your new lifestyle, preferably by renting. I appreciate you wanting to help your grown kids? can?t say I think you & your wife should be using the last few years before your retirement to be pushing most of your salaries towards that, but that is really a separate issue. BTW ? you have to understand that you frustrate the bloggers when they ask for specific information to help you with your question and you will only provide subjective terms like ?most?, ?some?, ?a bit tight?, etc. when it would help to provide specific dollar amounts, percentages, etc. otherwise this all just theoretic. Good luck in what you do.
 
IHB consensus is that housing will still fall 15 ~ 25%. If the house is just money to you, IHB will suggest you sell asap. But I'm sure your house is more than that to you. It's the house you raised your family in. For that it is priceless.
 
Wow, I hope Delroy sticks around. I like people who can take the heat and stay in the kitchen with all us crazies.





And I will add to the chorus that says: Why not sell the house now, as is, ASAP? Take the money and rent a nice up-to-date house/condo for a few years as you pay off the kid's loans. Then you can decide whether you want to re-buy here for retirement, or maybe someplace less costly.
 
[quote author="freedomCM" date=1242787400]Wow, I hope Delroy sticks around. I like people who can take the heat and stay in the kitchen with all us crazies.</blockquote>


I agree. You guys really do light the flames sometimes, and it's good to see people who can take it.
 
[quote author="no-vase" date=1242735881]

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?</blockquote>


I think your direct answer to my actual question explains your inability to effectively rehab your "subcompact" property today. You have no idea about the cost of materials and labor.



Who cares? Well, why are the majority of regulars on this site waiting for home prices to drop. Most of them tout an income that would easily allow them to afford to buy now and tout that they have the money. Who cares? People who don't want to overpay for a large capital expenditure.
 
[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>


Delroy,



(1) Do not borrow money to improve your home.



(2) If you want to improve your home, do it because you want to live in an improved home, but pay cash to do it.



(3) Forget the investment nonsense. Home improvements do not pay for themselves. You will not recoup your improvement costs, probably ever. If the value of your house increases at some point, it was not due to the improvements.



(4) I you want to improve your home, but you do not have the cash, recognize that you are going to lose money on the improvements and money on the interest on the debt. Look at it like financing an automobile; people do it because they want the car despite the fact that financing a depreciating asset is foolish. Don't fool youself into thinking it is an investment. It is not; it is financed consumption.
 
[quote author="IrvineRenter" date=1242792353]



(3) Forget the investment nonsense. Home improvements do not pay for themselves. You will not recoup your improvement costs, probably ever. If the value of your house increases at some point, it was not due to the improvements.



</blockquote>
I've been interviewing landscape contractors recently and they all seem pretty hungry right now. Every single one of them tells me to think of landscaping as an investment and how it will pay for itself and more by increasing the value of my home when I sell. I just smile and nod. I will do the landscaping, but it will be to enjoy my backyard, not to make a profit.
 
[quote author="High Gravity" date=1242793055][quote author="IrvineRenter" date=1242792353]



(3) Forget the investment nonsense. Home improvements do not pay for themselves. You will not recoup your improvement costs, probably ever. If the value of your house increases at some point, it was not due to the improvements.



</blockquote>
I've been interviewing landscape contractors recently and they all seem pretty hungry right now. Every single one of them tells me to think of landscaping as an investment and how it will pay for itself and more by increasing the value of my home when I sell. I just smile and nod. I will do the landscaping, but it will be to enjoy my backyard, not to make a profit.</blockquote>


Landscaping is the worst possible home improvement from a financial return standpoint. In fact, it is so bad have you noticed that builders do not finish the back yards? They don't because they know there is no way to make money at it.



Kitchen and bathroom improvements add about $0.70 for each $1.00 spent, and landscape improvements add about $0.35 to $0.50 depending on the improvement. Pools are toward the bottom of that range rather than the top.



Personally, I will almost certainly over-improve my landscaping because I like nice landscaping. It certainly won't be because I believe it adds any value.
 
i love the delusional home owners who dropped a 100 grand on a new kitchen and they now think they home is worth a 100 grand more. i cant help but LOL.
 
I think one could argue that pools add absolutely zero to the value of a house. A lot of people don't want the expense, hassle, and safety risk (to young children) that a pool brings, and will actively avoid houses that have one, or at least not pay more for one with one.
 
[quote author="Geotpf" date=1242796233]I think one could argue that pools add absolutely zero to the value of a house. A lot of people don't want the expense, hassle, and safety risk (to young children) that a pool brings, and will actively avoid houses that have one, or at least not pay more for one with one.</blockquote>


I would argue that they detract value from a house.



Pools reduce your buyer 'pool' by maybe half, so you get less interest/offers. People who do want pools know this, so don't feel compelled to recompense your expense.



And just like kitchens, some people who want pools are not going to be happy with your wal-mart pool, but want a sax5ave pool, like saltwater, etc, so they will have the added expense of removing yours.
 
I have read that pools are the worst, for the exact reasons Freedom and Geo state... they can be a negative. I know for us that if a property had a pool, it was instantly rejected.



I think the problem with any sort of improvements is that not everyone has the same taste. I would rather pay much less for a house with a kitchen that needed to be redone than to pay more for one that had been redone, but isn't something I love.
 
Hehe... at least snark is good for one thing... it gets the details out of posts.



The one thing about selling and just renting a nicer/newer place is it depends on how much they are paying now. If their mortgage is so low that renting would be a big jump over some HELOC+mortgage... I can see where they would rather stay put. And for some people... they would rather live in their home and fix it if it's more affordable than renting a nicer place.



I don't fault delroy for wanting to do some home improvements... regardless of investment value... some people just want nicer things and are willing to pay for it. I'm sure people don't see value in 3-car garages... but I'll pay extra as long as it's reasonable.
 
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