Author Topic: Smart Investment  (Read 3549 times)

Laura03

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Smart Investment
« on: May 26, 2017, 12:40:59 AM »
Is renovating my house or office a smart investment?

trashmanz

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Re: Smart Investment
« Reply #1 on: May 26, 2017, 12:59:47 AM »
Sometimes it is, and sometimes it isn't.

Feivel2000

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Re: Smart Investment
« Reply #2 on: May 26, 2017, 02:17:23 AM »
Depends on the definition of investment.

Will it lead to higher income? (Adding an airbnb room, e.g.) -> real investment.
Will it probably increase the resell value more than it costs and you are really planning to sell it -> most likely a real investment.
Will it only make you feel warm and fuzzy? -> no investment. But maybe a good idea nevertheless.

yachi

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Re: Smart Investment
« Reply #3 on: May 26, 2017, 05:33:21 AM »
Depends on the definition of investment.
Will it probably increase the resell value more than it costs and you are really planning to sell it -- most likely a real investment.

Just to expand on this point, very few renovations are able to achieve this if you need to pay someone to do them, and not many are able to achieve this even if you can do your own renovations.
Note the 'and you are really planning to sell it' If you're planning on renovating, and living with the renovations for 10 years, the'll be outdated when you finally sell.

Feivel2000

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Re: Smart Investment
« Reply #4 on: May 26, 2017, 07:25:45 AM »
Laura, looking at your other post: It would really be helpful if you add some context to your questions.

Makes it way easier to help you.

Laura33

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Re: Smart Investment
« Reply #5 on: May 26, 2017, 07:41:43 AM »
Generally, no.

IF you are in a hot housing market, and IF the renovation will return more than 100% of its cost considering the state of your home/office and whether you are overimproving for the neighborhood, and IF you plan to sell soon enough that the reno will still look fresh/new/modern, you might make some money off of it.  But all of those "ifs" make it a longshot, especially when you consider the other investments you could have thrown that money at.

I have thrown a ton of money into my house.  I will probably get some of that money back when I sell.  But I made the choice to renovate assuming that I was investing in my own personal happiness and comfort in the place I plan to stay forever.

boarder42

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Re: Smart Investment
« Reply #6 on: May 26, 2017, 10:11:41 AM »
renovating a house if its not for resale and planned to be lived in is an expense.  could you recoup that cost when sold years down the road, possibly but in general renovating should be seen as an expense.

InnTee

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Re: Smart Investment
« Reply #7 on: May 26, 2017, 10:15:44 AM »
Depends on the definition of investment.
Will it probably increase the resell value more than it costs and you are really planning to sell it -- most likely a real investment.

Just to expand on this point, very few renovations are able to achieve this if you need to pay someone to do them, and not many are able to achieve this even if you can do your own renovations.
Note the 'and you are really planning to sell it' If you're planning on renovating, and living with the renovations for 10 years, the'll be outdated when you finally sell.

I heard a while back (don't remember the source) that the renovations with the biggest ROI are generally kitchens and bathrooms.

boarder42

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Re: Smart Investment
« Reply #8 on: May 26, 2017, 10:50:35 AM »
Depends on the definition of investment.
Will it probably increase the resell value more than it costs and you are really planning to sell it -- most likely a real investment.

Just to expand on this point, very few renovations are able to achieve this if you need to pay someone to do them, and not many are able to achieve this even if you can do your own renovations.
Note the 'and you are really planning to sell it' If you're planning on renovating, and living with the renovations for 10 years, the'll be outdated when you finally sell.

I heard a while back (don't remember the source) that the renovations with the biggest ROI are generally kitchens and bathrooms.

the term ROI shouldnt be used with a home or office renovation unless you plan to flip the home or office for profit.  you can renovate your kitchen today and bring it up to current standards and finishes.  you live there 30 years and dont change it, its worth nothing compared to what was likely in its place before.

InnTee

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Re: Smart Investment
« Reply #9 on: May 26, 2017, 11:47:39 AM »
the term ROI shouldnt be used with a home or office renovation unless you plan to flip the home or office for profit.  you can renovate your kitchen today and bring it up to current standards and finishes.  you live there 30 years and dont change it, its worth nothing compared to what was likely in its place before.

This makes sense on a practical level.

From a more theoretical viewpoint, you can look at the structure (including any improvements) as an illiquid depreciating asset. The longer you wait to sell it, generally the less you can expect it to be worth -- if you look just at the structure, that is. I think most of the long-term appreciation potential is generally in the underlying land.

boarder42

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Re: Smart Investment
« Reply #10 on: May 26, 2017, 01:56:22 PM »
the term ROI shouldnt be used with a home or office renovation unless you plan to flip the home or office for profit.  you can renovate your kitchen today and bring it up to current standards and finishes.  you live there 30 years and dont change it, its worth nothing compared to what was likely in its place before.

This makes sense on a practical level.

From a more theoretical viewpoint, you can look at the structure (including any improvements) as an illiquid depreciating asset. The longer you wait to sell it, generally the less you can expect it to be worth -- if you look just at the structure, that is. I think most of the long-term appreciation potential is generally in the underlying land.

yes the appreciation is primarily in land.  making reno's not investments.  they are spending so lets not talk about best places to get ROI on something you dont plan to sell.