Renovation values

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consultantjournal
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Postby consultantjournal » Sat Jul 21, 2007 3:14 pm

"I mean, why are *they* spending money on these things?"

By that, I meant that there were real flippers coming along when we went to showings for homes in our area. I just wonder how they know what to do. At one home, which was (1.5 years ago) priced at $425k, our agent said that with new flooring, fixtures, lights, stone counters, paint and some powerwashing of the deck, she'd expect to relist it for $499k. Yet that would cost less than $20k to do. At around $20k to sell (and pay property taxes), that's still $35k in profit. So there must be some way to know what to do.
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Postby consultantjournal » Sun Jul 22, 2007 4:43 pm

I think I'm just going to order the quartz counters. I never choose higher end items. But I like the colour. I honestly find granite very busy. And the quartz people can get it done before the baby arrives. In the end, I am worried about something that is going to represent less than 5% of the investment in renovations and less than a tenth of a percent of the value of our home. It is probably worth the money to not have to keep shopping around and worrying about what to put in. I never make decisions this way, but I feel a lot less stressed now!
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Postby Baker » Sun Jul 22, 2007 8:06 pm

pf101 wrote:
Baker wrote:
sandycheeks wrote:re these shows:
1. the amount they say they spent on an upgrade seems very low. We are bargain shoppers/renovators and could never match the prices they quote. 2. the labor costs they quote are even lower. We speculate that they are using majority unskilled day pickup work, not the kind you get from a staffing agency. I don't take the prices they quote seriously.

I think the price you get for a house is based mostly on comps.


Honestly I find their material prices to be absolutely outrageous. You can almost always find the stuff cheaper then what they say they pay. As far as labor cost its completely different in every are, by very large numbers. Labor in chicago that runs $50/hr would at thee most $25/hr in many southern states if not even less than that.


Both labor and materials vary depending on area - and how you shop. Labor in Chicago is expensive because it's union.


Material definantly varies if you buy locally and through suply houses but if you shop online and through distributors then its all the same. As far as the unions go they do keep the price up slighlty but its more dictated by cost of living in the area.

If you want the quartz go for it. Its a fantastic counter and its not that much more. AS far as the house flippers go a lot more of it had to do with ridiculous market appreciation going on the last 5 years than true returns on the upgrades they put in. In the current market I seriously doubt nayone could run in make some basic upgrades and walk away with a huge chunk of money. Unless they got the house for a steal at forclosure or tax sale.

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Postby consultantjournal » Sun Jul 22, 2007 8:36 pm

Baker wrote:Material definantly varies if you buy locally and through suply houses but if you shop online and through distributors then its all the same. As far as the unions go they do keep the price up slighlty but its more dictated by cost of living in the area.

If you want the quartz go for it. Its a fantastic counter and its not that much more. AS far as the house flippers go a lot more of it had to do with ridiculous market appreciation going on the last 5 years than true returns on the upgrades they put in. In the current market I seriously doubt nayone could run in make some basic upgrades and walk away with a huge chunk of money. Unless they got the house for a steal at forclosure or tax sale.


Yeah, I think a lot of those house flipping shows are taking advantage of the market conditions. And the market here in Vancouver has been crazy (we're now among the top 15 most expensive cities in the world). But the places that have been upgraded do sell for more than the ones that have not. The market here has gone up about 8% since we bought last fall, but it seems our area has gone up a bit more. We got our place at a "fire sale" price from an investor who wanted out, so that should more than cover the renovation costs. Still, you have to wonder how the flippers (and I don't mean Joe Six-Pack) decide what to put in as upgrades.
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Postby sandycheeks » Mon Jul 23, 2007 5:23 am

consultantjournal wrote: Still, you have to wonder how the flippers (and I don't mean Joe Six-Pack) decide what to put in as upgrades.


I think it comes down to having the right 'eye'. Instinctively knowing which upgrades will get a return on the money. You can learn that painting and replacing light fixtures is important, but you have to have the right eye to know which color to paint and which fixture to choose.

If they don't have the eye for design but they have the capital and the eye to find an undervalued property, then they use a designer to help them decide which upgrades to make.

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Postby radioheadok311 » Mon Jul 23, 2007 11:43 am

This could've already been discussed, but have you looked into getting "remnant" pieces of quartz? I know they exist for granite, not so sure about quartz... Sometimes you can find them much cheaper than getting a slab made to order. Or you could go with granite tiles, but you seem to not like the look so that might not be an option.

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Postby consultantjournal » Mon Jul 23, 2007 2:27 pm

Our kitchen isn't the right shape for remnants. However, if we do the bathrooms, I'm hoping to use remnants for that.
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Postby Baker » Mon Jul 23, 2007 5:01 pm

honestly most rehabbing is all eye candy. Any experienced person won't get a home with any serious structural flaws. Then its hardwood floors, kitchens, bathrooms, trim and paint. Seriously its a pretty basic formula. Then as far as material goes they go to the same discount people everytime and build a relationship to get better deals. Shop for closeouts, partial lots etc.

yes some houses require a lot more work but those are usually more for very serious rehabbers and builders that do it full time

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Postby consultantjournal » Mon Jul 23, 2007 5:21 pm

Seriously its a pretty basic formula.

Yeah, but knowing the level of upgrades is tricky. In some markets, you would do laminate floors, arborite counters, basic fixtures, etc. In others, you'd do hardwood, granite, mid-range fixtures. In still others, you'd do hardwood, marble/quartz, designer fixtures, etc. I guess our challenge is that we're not sure whether we're in the second or third categories.
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Postby plonkee » Tue Jul 24, 2007 4:46 am

I'd have thought that the easiest way to see what is worth doing is to look at high end properties for sale that are the same size / location. Then you can see how much more they are listed at and what the difference is between your property and their property.

If the expensive properties all have granite and hardwood floors, then if you want to be at the top of the market, you need to have granite and hardwood floors. On the other hand, if the expensive properties are only $10K more than the cheap ones and it would cost more than $10K to put in the added features, its probably not worth it.

Flipping properties is very popular over here, lots of people (including me) look for a property that they can 'add value' to. Just as many people never want to do any DIY at all. The most common things to do for a complete rehab are rewiring, replumbing, new kitchen, new bathroom, redecorating. Anything less than that is a bonus - I'll likely be redoing the kitchen and bathroom and redecorating as it doesn't need rewiring or replumbing and I'd expect to get back at most twice what I pay for doing so.

There's definitely a difference between improving a kitchen because you don't really like the old one and improving a kitchen because everyone walks in and realises that you need to get a new kitchen.
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