Maximizing shop resale value

[kwschumm]

I just turned 60 and having a dedicated shop has always been a dream. At some point age will take its toll and I'll have to sell the new house and shop we are now building. The discussion about how little value a shop adds to a homes resale value got me thinking.

My plan is to build the shop to high standards so that it can be easily converted to living space. 12 foot ceilings, fully insulated, heated and cooled, plenty of electrical, and a full bathroom. It would be connected to the house by a breezeway and could make for a nice mother in law home, or additional bedrooms, game room, etc.

Has anyone else here planned their shop with an eye toward living space conversion? I'm curious if this is a reasonable thing to plan or just pie in the sky thinking.

 

[The Cobbler]

If your locality permits inlaw suites, then I would plan that in the build.
I'm pushing near 60 myself & starting to plan things around resale value. hoping for another 20 years here tho

 

[y'sguy]

I hear you. I'm planning the same.
However in our state, Oklahoma or our city at least a garage is not include as total square footage in the price of the home. That is usually a kicker as to how much you may gain in some ways.
I however think if one would build an outbuilding as a garge/outbuilding with a full functioning apt. amentities it should add value. But it also define the market as a seller. Not everone is looking for that. But I always say it just take one person or two to like it or need it. It may be just what they are looking for.
Today it seems like people build to a universal wish list and nothing more.Example…granite cpountertops! how did we ever get along without them before?

 

[bczygan]

Sounds like you are already building, so your decisions have really been made.

The way to maximize value, is to build exactly what the market wants, not what you want.

 

[kwschumm]

Sounds like you are already building, so your decisions have really been made.

The way to maximize value, is to build exactly what the market wants, not what you want.

No, haven't started building yet but things are rolling. Basic house and shop floor plans are done but clearing is being done now. Need to clear before we can do a site plan to see the lay of the land, then need site plan to apply for permit.

 

[Viper98912]

The way to maximize value is to find the right buyer (in the future) who wants a shop with their home.

But in my opinion, if you're looking at enjoying this place, build it exactly the way you want it. Enjoy it for the next 20 years. If you're on the way out @ 80, then who cares what the resale value is. You can't take it with you, and you enjoyed it exactly the way you wanted it.

 

[matt_i]

Agree with SSDave, make it match the house, "side garage" as in doors not parallel to the street. Large(r) windows make it more like a living space with the downside of being more difficult to secure. Using energy efficient windows would also help towards HVAC despite their initial higher cost.

Anything with nicely finished interior is going to be interesting to a future buyer. I think a drywalled space with flooring like a nice epoxy floor or a tiled floor is something that would really catch a prospective buyer's eye.

 

[NUTTSGT]

The way to maximize value is to find the right buyer (in the future) who wants a shop with their home.

But in my opinion, if you're looking at enjoying this place, build it exactly the way you want it. Enjoy it for the next 20 years. If you're on the way out @ 80, then who cares what the resale value is. You can't take it with you, and you enjoyed it exactly the way you wanted it.

Pretty much my thoughts as well.

I wouldn't be building it for the next guy, I'd be building it for me. Honestly, I don't care what the next guy wants or thinks I "should" have done. If there is something he wants different, he can do it on his dime.

I took the garage from what I had to (bought) what I have. I've dumped some money into refurbing the place to my likings but everyday I go out there, I get a return on my money, enjoyment and peace of mind.

 

[mikegt4]

The way to maximize value is to find the right buyer (in the future) who wants a shop with their home.

But in my opinion, if you're looking at enjoying this place, build it exactly the way you want it. Enjoy it for the next 20 years. If you're on the way out @ 80, then who cares what the resale value is. You can't take it with you, and you enjoyed it exactly the way you wanted it.

^^^^THIS^^^^
You are using "mid-life" thinking to define "latter-in-life" decisions. Enjoy what YOU want, not what the next owner wants. I did and don't regret it.

Your heirs, the assisted living facility and the estate lawyers may not like it but who cares what they think.

 

[cajunfirehawk]

Agree with SSDAVE, I have a friend that is a real estate appraiser and he always tells me the same thing; if the "garage/shop/man-cave" is attached to the house, if memory serves that makes the sq footage combine of both house and said shop/garage/man-cave and I think if my aging memory (close to 60 too, lol) serves me, you get the same $ per sq ft as the home, but research this and don't take my word! YMMV!

 

[RVDan]

Around here a shop adds more value than living space.

 

[Northislander]

As others have said build what you want don't worry about the next guy. I buy a new pickup approx. every 5 years i don,t put seat covers on i wear out the seats myself the next guy buying used can put seat covers on. I payed for the privilege to wear out those seats. Same with the house or garage do it how you want it don't spend money on something for someone else down the road save the money and spend it on you or yours

 

[rburke65]

I built my shop in 2012....32'x56', full attic and 20'x20' porch, a lift....I was 64 yo. I figured I'm not taking it with me and I'm spending it and going to enjoy it while I can. Don't care if I get my money back or not.

 

[James-W]

Where I live we are zoned for single family dwellings. To make living space from a garage you would need to get city approval and I doubt that would happen, unless you were really good buddies with someone on the city council.

I tend to agree with the notion that you should build the garage the way YOU want it and not the way you think someone else MIGHT want it. That being said, it doesn't hurt to at least keep in mind that you will most likely be selling the property at some point in time. In other words, don't do something really weird to the garage that would cause potential buyers to think twice about buying the property.

 

[cheechi]

Here is what I would do in your situation. Assuming you have the land and 'curb real estate' to do it, build the house with a 2 or 3 car attached, that has side entrance. I'm from the northeast you may call it something different but a 'duplex' or 'common' driveway where it's not a monolith pour, it's done in sections and there's a halfway line down the whole thing. Make the curb entrance wide enough you and your 'neighbour' could enter and leave at the same time and don't get any narrower than that. So you come into your driveway into your 3 car with enough room to stay on pavement and turn in, with any vehicle that would fit in the garage.

On the opposite side of the driveway, build the shop you want. Have it match in facade and style to the house to the degree that it makes sense. I would put a first floor living quarters in it, no matter the size, and call it a guest house, pool house, etc. You could later if you wanted split the properties into two and sell them separately. You might be surprised that your asking price for the house with the shop, might be close to or the same as your closing price for just the house and you could move into the apt you built yourself in the shop, or kids could inherit it, or two different buyers, at least you would have options.

However I agree build it for you and don't let the next guy ruin your fun while you're still having it.

 

[kwschumm]

My personal opinion, for what it is worth, is that the way to maximize the value of a garage is to attach it to the house. Note that I said Garage, not Shop.

If you have a higher end house, a 3 car garage is a necessity for top appraisal value. Having that garage finished nicely adds some value. Having the garage match the house architecturally also adds value. A 3 car garage that is generously sized is a great shop space.

I just went through the same decision you did. If I did a detached shop, 1000 sf was the limit on size. If I did it attached to the house, there was no limit. I did a 3 car garage that is 36 x 48. The back 18 feet will be closed in, and has attic trusses above it. The front 30 feet x 36 feet width is 3 conventional garage bays, with scissor trusses that give me the ability to put a lift in the center bay. I went with 9 ft x 8' high doors on the sides, with an 9 x 11 foot high door in the middle. That buys some value in the future for those that want to store a motor home, although they may have to take out some of the back shop area to make that work, depending on length.

If you just want a cheap, high square footage covered area to store junk, it's hard to recover any of the cost of building it. Also, if you go too high, it looks too industrial and is hard to get value.

So, to answer your original question succinctly:

Build the shop as an attached garage, architecturally matching the house. Go with the smallest amount of square footage that you can live with (slightly oversized 3 garage minimum). Go with the lowest height you can live with that works well as a garage (I'd suggest 10' ceiling minimum). If you want some shop area for storage, use attic trusses or a basement under the house for storage instead.

The house already has a 3 car garage. This would be an additional 1500sf 3-car sized shop connected to the house with a breezeway.

 

[Voi]

I just turned 60 and having a dedicated shop has always been a dream. At some point age will take its toll and I'll have to sell the new house and shop we are now building. The discussion about how little value a shop adds to a homes resale value got me thinking.

My plan is to build the shop to high standards so that it can be easily converted to living space. 12 foot ceilings, fully insulated, heated and cooled, plenty of electrical, and a full bathroom. It would be connected to the house by a breezeway and could make for a nice mother in law home, or additional bedrooms, game room, etc.

Has anyone else here planned their shop with an eye toward living space conversion? I'm curious if this is a reasonable thing to plan or just pie in the sky thinking.

Fully finished pole barns don't seem to add that much more value in my area than just a shell. I suspect buyers are just happy the permitting, dirt work and erection is done and are glad to not mess with that.

Shops with living space are basically no longer allowed in my area unless they are attached to the main house so there is currently an increased value in such shops that are grandfathered in. I don't know what they added in value before they were no longer allowed.

Motorhome, travel trailer & 5th wheel storage is desirable in my area. Pull through storage where you can leave your truck attached is even better. Supposedly one guy hooks his truck, 5th wheel and boat all together the day before a camping trip and pulls straight out the next morning. Then drives straight in when he gets back home.

That means 14' overhead door(s) and taller sidewalls or a monitor or saltbox style barn.

 

[Pluribus]

If you're banking on the potential for living space conversion, I'd recommend that you first make sure how your AHJ views a breezeway-attached building that has living space. Do they consider that attached, or would they consider it an Auxiliary Dwelling Unit (ADU?) If so, are you in an area that allows ADU's? If you're on well and septic, would that require re-classification of your well? Would it require an expanded drainfield and potentially a larger septic tank? Since there are so many "what-ifs?" and hypotheticals, see below.

I'd say I'm at about 95% in the, "build it the way you want it," and 5%, "think of resale considerations in design." Regardless, what appraisers think of a shop may not be the same as what you think, and the return percentage may **** in the end.

 

[ssdave]

With the additional information that you already have an attached 3 car garage, I think that the return on an additional shop will be near zero additional appraised value. Unless you have a property that can be subdivided later, as some posters have suggested, I'd build what you want and can afford to spend as a sunk cost, not as an investment. The only consideration is make it look good enough and fit in with the house so that it doesn't actually DROP the appraised value.

I'm with the "build what you want" crowd now, that's probably the best course.

 

[justanengineer]

I concur with ssdave on maximizing value but realizing it doesnt apply to you my experience has been that the additional space will actually have a negative impact on resale. Others are welcome to keep their head in the sand but realistically there is a limit to what most folks will pay for. Folks with experience in real estate know the easy sell is the 2-3 bedroom starter home, the toughest sale is the exact opposite - 6k+ ft2 custom McMansion. My folks have been going through this the past few years, the 40x100 big shop and 30x30 wood shop dont really affect appraisal either way but they severely limit the number of interested buyers by pushing up maintenance and taxes.

 

[e015475]

I'm at the tail end of the strategy you're looking at - I built a house 23 years ago with a shop that was a part of the house and designed with the ability to be converted to a functional part of the house. The designer that did the plans for the house provided plans for how to convert it to a 'mother-in-law' suite, either connecting to one of the bedrooms in the main house, or with its own outside entrance. It has a bathroom, its own ac/heating system, LED can lighting, 10' ceilings and is fully insulated. The square footage is included in my property tax.

A year or so ago, I put the house up for sale. I didn't convert the shop to living space for the listing, but included the plans for converting it in the listing. I also had renderings done showing the space as a home theater and as a home gym. I thought it'd be restricting the pool of potential buyers if I converted it to any one of these configurations, so I left it as a shop, but put 2'x3' prints of the renderings/plans on poster board on the walls of the shop (the shop is dry-walled, has a seamless epoxy floor and painted the same color as the interior of the house - it is quite nice, if I do say so myself.)

The results of all this effort? Not much. It was shown by realtors an average of about twice a week, which was quite good for this market. I thought for sure there'd be someone like me looking for a shop space for a car project, a home theater fan who wanted the space for his dream project, someone who needed to have their parents live with them but wanted to keep their privacy, or an exercise nut that wanted a home gym. In all the feedback I got from my listing agent, there was very little mention of the shop or any questions about converting it to livable space. It didn't seem to matter.

I priced the house at the average cost per square foot for my area, and included the attached shop at about 50% of that value. The premium on the house price for the shop was in the range of about 7-10 % and the shop added about 15% to the overall living space of the house if converted. I had lots of showings but only a couple of offers. The offers were a couple percent off the livable square feet x going price per square foot - I couldn't 'monetize' that shop space.

I concluded that-

- Men don't buy houses, women do, and they don't give a damn about a shop, home theaters, gyms. They seem mostly concerned about the kitchen and master bath.

- You can't sell potential - it would have to be converted to true livable space before being able to extract some dollars for it.

- The minute you have it converted to some specific use, you restrict the pool of potential buyers

Bottom line? Build whatever you want and enjoy the hell out of it for as long as you're there, but don't count on getting much more back for it than you're spending to build it. Except for the master bedroom sleeping, I spend more time in my shop than any other part of the house. I've had more enjoyment with the $30K or so it cost me to build my shop than almost anything I've ever spent money on.

 

[sberry]

I agree with not building weird but don't see a large reason to worry about resale, if this is a big issue for additional building here then you don't need it and cant afford it. Painting things you already own add value, fixing some, but unless I was a savvy investor in this biz wouldn't worry about it, build what you wanted or needed. This is probably mostly want.
I am getting more practical and am not a good investor type so I made it all like a pair of vise grips and a pit stop/service with some fab and building tossed in. Even though it was directionally aimless at times it was a foot forward in assets at each step.
I am the builder so I leveraged each step, there is some resale to a set of shelves I built but I needed them too. I gained a lot of equity. 75 large doesn't go far in a farmed out building but as a pile of materials at cost it goes a ways and in a case or 2 didn't finish it all at once but got my sq ft first and worried about the rest later and so much came for cheap or free and help when I really needed it. Used a little day labor bud types as needed at the peak.
If you got to take loan on future money its not worth it, the things I do are a tool and even dumped on by a lucky lotto wouldn't have most of it and am going to start a strip as it is to gain some space back vs addition.
I have 1 more building I want, a shack but as it is it wont make me any money, unless I got the material for free or super cheap it wouldn't make much sense in the short.
Even the stuff I have in the building I do have for it isn't worth other than the labor savings. It doesn5t have resale value now all in a pile but as a collection of working tools is a different matter.
A little like the Snapon tool box, I used Cman and it does and replacement but I paid 75 for 1 25 yrs ago when I needed it to put in my 200K building. As I mentioned in other threads more than once, I bought a Sears super set when I started and added around it. In hindsight it was a very good move and even where I lost a few things it wasn't too painful or a deal breaker and gave some breather room while I looked for stuff to fit what I did need.
I need good hand tools but need other stuff too. I got a few premium items, I got a puller set a while back as I couldn't find what I wanted but it is an event solver a couple times a year, with a bit more creativity may been able to get around it but the savings on the job we did well paid for it and then some.
If you are going to stuff junk in it, then no, mine lets me run old equipment, different matter.

 

[Falcon67]

I'm 60+, my thoughts is someone else will have to figure out what to do with the house, shop and all the ****.