$1 for $1 home improvements as home resale value...

Hi

Anybody know where I can find the formula that calculates the $1 for $1 value you get from home improvements?
I know a for every $1 you spend in the garden you get something like $7 on resale value. But for every $1 you spend in the bathroom you get $0.50 - or something like that... any ideas where I can find this?

Thanks Ed

Hi Ed,
Didn't know about the landscaping one, but certainly will apply to my new place. Re value of return this stuff below relates to how much to allocate, not sure where that fits we getting it back.

Rules of thumb for renovating. How not to over-spend.

New kitchen: Spend between 4% and 6% of the property value.
New bathroom: Spend between 2% and 3% of the property value.
Landscaping: Spend 1% to 2% of the property value.
Robert Caulfield of Archicentre suggests these pointers:

If you're rebuilding a home from scratch, don't spend more on the structure than the value of the land.

If you're doing a significant renovation of an existing house, don't spend more than half the value of the property – i.e. if you buy an old house on land for $500,000, don’t spend more than $250,000 on renovation.

Anyone have more info?

88% of all statistics are totally made up.

Hi Ed,

I always thought kitchen+bathroom are the main selling point as they are the most expensive to renovate. If it's done properly don't think you only get half the value from that. Don't quite agree with the numbers you mentioned, where did you get that from?


Cheers
Allan
http://building-our-first-house.blogspot.com/
Current status: Contract signed, old house demolished, waiting for excavation to start!

It was on ABC radio a couple of years ago... a real estate guy was being interviewed on what to spend money on to add value to your home...

I think it's a generalisation but accurate...

Ed

This is very interesting. At the moment, people are spending $180,000 for a house on $120,000 blocks in Melbourne.

I would say 90% of people who are building in estates in outer suburbs of Melbourne would be spending more on the house than the land.

That's not good. Recipe for negative equity in bad times. In Sydney you can have vacant land for $250,000 or 3 bedroom brick veneer house for $270,000 that is on a bigger block roughly in the same suburb (Dean Park), where Stonecutters Ridge is being developed. Which one would you choose if your funds were limited and loans were hard to get?

Hi buildingadreamhome,

these prices in western sydney must sound so funny to you. Can you buy a studio in the lower north shore for these home prices we have in the west?

I spent $80,000 for a 780m2 block in the outer west of Melbourne.

Show me a house that I could build for $80,000.

Crazy talk!

Regards

Chris

Hi Ed,

What we have found with our renos is that we get about $4 for every dollar that we spend on the outside (first impression from front) and about $2 back for every dollar that we spend inside.

This is all very relative to what you decide to do to those areas as well. For example, carpet seems to show us better returns then floor boards in your middle range Melbourne suburbs, 3/4 bedroom homes. However in Qld, having tiles in the living / family area seems to be more attractive to buyers and therefore show us better returns.

What it comes down to is what the customers in that area find important to them and will find desirable.

For example, in those same middle range suburbs with homes ranging $250K-$350K, having marble benchtops does not give that great a return as opposed to putting in a bath or converting a laundry into a second bathroom. etc etc

I hope this has helped in some way. All the above mentioned information is based on my personal experience only, and analyzing the costings of our previous renovaitons and profitability of those deals.

Perhaps a little random but can I just say that the kitchen and bathroom are top priorities for me as its where I spend 90% of my time!

hi
where did you buy the land?

i purchased my land in Bayswood Estate in Aldinga for a cost of $72,000
387m2. Just the most basic of houses (3bdrm +ensuite with enclosed garage) is starting at 98,000 without foundations or floor coverings.

Just like Craig - we would be hard pressed to find a house to build that was cheaper than our land!

Possibly in some of the inner suburbs of Melbourne, it wouldn't make sense to build a house that was more expensive than your land, but in the area we are building in and in alot of the newer estates, established houses are selling for more than purchasing house and land seperately, even on what would have been cheaper blocks. I guess our assmption (which has thus far proven accurate) was that as a previously unsettled area becomes established, it is inevitable that land prices rise.

I'm with you Sharee, how can we build a house the same price as our land? We are spending twice as much on the house as on the land.

We have a third of an acre and it cost us 155k. So the suggestion is to put about a 18sq house on my block? To spend the same amount?

On my street so far there is a PD prestige home just starting (I can't figure out the plan it's driving me nuts ), a PD Heywood 29, a Davis Sanders that looks around 25sq, there will be a home the same as mine (Hi Liz ) 35sq....

So taking all that into account, I think we're on the money with what we're considering for our area.

I think these formulas are ridiculous... the same formula cannot possible be applied to land in Camberwell as land in Wallan.

We're building in Bundoora (about 18km from Melbourne CBD) and we'll be spending about $100k less on building the house than we paid for the land. And, our land was cheap in comparison. Land in the 3rd and 4th stages of the same estate are selling for at least $30k more than ours for smaller blocks that don't have the same view/placement (we're on a cul de sac next to a nature reserve).

Exactiy Djelibeybi,

That's what I'd expect for Bundoora.
The same formula can't be applied to your situation (a small prime estate in an established area) and my situation, (a semi-rural estate in what is rapidly becoming Melbourne's northern fringe).

I don't understand how some of the sweeping statements made in this thread could possibly apply to both of us...

Jo

They do say that 84% of statistics are made up on the spot.