Return on investment?

[tegguy]

I know this varies widely per area but I am curious what kind of return on investment do people generally see when adding a shop to a property?

 

[tigerbalm2424]

None

Its more just a selling point...

 

[ikessky]

In our area, ROI comes from three things: Master bath, master bedroom, and kitchen. Detached buildings don't seem to do much because many people don't want to talk out to them in the winter time.

 

[tegguy]

None

Its more just a selling point...

I was afraid of this. Does it increase the property value at all? (I mean obviously to the right buyer it would) but I mean in general

In our area, ROI comes from three things: Master bath, master bedroom, and kitchen. Detached buildings don't seem to do much because many people don't want to talk out to them in the winter time.

Yeah winters up there ****. I spent 6 years in South Dakota.

 

[Nighttrain]

The return comes via YOUR enjoyment that you get from being out there. All depends on the buyer, do they want the extra garage? They will pay for it, someone that is not wanting the garage won't pay extra. Pretty much like a pool. Both will raise the property value at the Tax Office.

 

[tegguy]

I have another question off topic but I don't think it justifies a new thread. I'm trying to find what regulations there are in the area we are looking to buy a house but I can't seem to figure how what to search for to find these. Any advice?

Lets say Oviedo Fl for example.

 

[brownbagg]

shops and swimming pools lower the value except with county property tax. Most buyer want a plain barren back yard, with nothing but grass

 

[sublimate]

I would hope to get 50 cents on the dollar.

 

[Hawk]

I was lucky in that the three nice outbuildings on my property kept most of the young buyers from wanting the property until we found it. It was listed for 2 and a half years before we found it.

 

[mayday0017]

I would say it can add value, just depends.... I know I would pay some extra and I think most of us here would, that being said I wouldn't pay 50c on the dollar because I can build one for 1/2 doing it myself vs paying somone anyways so at 50c on the dollar I can have a brand new building built how I want it where I want it.

 

[tegguy]

I was lucky in that the three nice outbuildings on my property kept most of the young buyers from wanting the property until we found it. It was listed for 2 and a half years before we found it.

Holy listing time. I hope my current house doesn't take that long to sell.

 

[FITO]

We bought our current house 3.5 yrs ago, added pole barn last Oct and just finished refi back in Apr. Refi appraisal reflected barn and then some. We were very shocked.
Take that with a grain of salt, don't bank on it and be happy when it does.

Good luck with whatever you build!

 

[StevePgh]

My in-laws three car detached garage added only 33% of its cost to the value of the home based on actual professional independent appraisals before and after the garage when factoring for average housing market declines. The right buyer (probably everyone on this board) would look at it as a plus, for others it is an extra structure, driveway, etc. to maintain.

 

[tkonbass]

To some degree it will depend on the looks and quality of the structure and whether it fits in the surrounding area. That's what I was told by my appraiser. If it is a shack and seems as though it will just add to the up keep of the property or is your typical metal building there likely will be no financial ROI, just you own satisfaction. Unless you get lucky and the next buyer wants a shop too. If you build something that has similar bones and looks to your house so it all ties together you're likely to see some appreciation.

 

[Gary S]

I live in a city, and when I bought my house, it had no garage on the property at all. I built a 24x48 garage, and it increased the value of the property more than it cost to build, so for me, the retun is 100%+.

 

[d.mcfarland]

I think it would depond the the quality of the build. The 12-guage garage or Mark's monster garage are two examples of value adding areas. Props to both of them on fine planning and work.

 

[Milton Shaw]

The return on investment is directly to you on how much you do and can create in your use of the space. If it cost $15,000 and you save $30,000 in repair cost and replacement cost of automobiles you have had terrific ROI. The immediate ROI is about all you are going to see as they really won't add to property values except for tax purposes. If wood working is your hobby, add the value of each thing built and the amount it would have cost to purchase and then figure your ROI. If car restoration, What would it have cost to have someone else do the work or could you have afforded someone else to do it. My shop has paid for itself several times over on savings on car repair, furniture/cabinets made, welding projects complete etc. I have restored and driven for years at least 6 cars way beyond their natural lives. I hate car payments and have never had them because of being able to fix/paint/rebuild/reupholster cars by having shop space. A $15,000 outlay on materials for a shop and doing work yourself would repay it self many times. Just don't expect the return to be in real estate prices.

 

[tegguy]

The return on investment is directly to you on how much you do and can create in your use of the space. If it cost $15,000 and you save $30,000 in repair cost and replacement cost of automobiles you have had terrific ROI. The immediate ROI is about all you are going to see as they really won't add to property values except for tax purposes. If wood working is your hobby, add the value of each thing built and the amount it would have cost to purchase and then figure your ROI. If car restoration, What would it have cost to have someone else do the work or could you have afforded someone else to do it. My shop has paid for itself several times over on savings on car repair, furniture/cabinets made, welding projects complete etc. I have restored and driven for years at least 6 cars way beyond their natural lives. I hate car payments and have never had them because of being able to fix/paint/rebuild/reupholster cars by having shop space. A $15,000 outlay on materials for a shop and doing work yourself would repay it self many times. Just don't expect the return to be in real estate prices.

Fantastic point that I was completely over looking. I wasn't thinking how much damage to my truck would be stopped by storing it inside. I hate car payments also but right now I don't have a choice due to limited space.

 

[rsanter]

around here it adds to the desireability and value of the property
you need to look at your area. it will not add on your comps but with the people around here being into their boats, atvs, and RVs the houses with a nice or decent shop go fast

bob

 

[ForceFed70]

LOTS to consider here:
- Cost to build. If you built it yourself and it cost $20,000 vs having a contractor build at a cost of $40,000.
- Need. Does the house already have an attached garage or is this the 3rd garage on the property? People want a garage, if the existing home did not have any garage then adding a garage will have a decent ROI. On the flip-side, people generally don't want 3 garages. If you already have an attached garage, and a detached garage, a 3rd garage will do very little for your property value and can even hurt the value.
- Fit with the community and the house. A massive garage that dwarfs the property and primary dwelling isn't going to add much value (or could hurt value).

 

[Steevo]

Location, location, location.
In the area I live in in California, a separate shop/garage is a rarity, and for many, it takes up lawn/pool/patio/dog-run/garden/etc. space. Most of the people in the area hire a gardener and if they have recreational vehicles, they are kept in a storage yard somewhere.

Where I built my retirement home in Idaho, shops are common, desirable, and the bigger the better as long as it blends with the home and doesn't dominate the property. Everyone there has several snowmobiles, ATV's, travel trailer, snow machine trailer, motorcycle trailer, and lots of garden tractors/tillers/etc. A place to keep and work on these things is a desirable thing, but since shops are not uncommon, they don't raise the property values much, if any.

My shop was built during the time of declining property values, so my current taxed value is still about the same as before the shop build.

 

[Bib Overalls]

From the business stand point building a shop does not make much sense. The return on investment is not that great. At 69, I don't expect to be around when our property sells. But the return, in terms of quality of life, is immeasurable. I have 1,200 square feet of heated and air conditioned work space that is well lit and just a few feet from my house. If I was in to stamp collecting that would be an unnecessary extravagance. But I am a self reliant type that likes to piddle with all things mechanical and hot rods in particular. I can't take it with me but I can enjoy it while I am here.

 

[carhunter]

We had a heck of a time finding anything house with a nice outbuilding...
There just wasn't anything that met our criteria AND had a decent size workspace. Everything that had a shop already on the property was not very desirable house-wise. So we ended up buying the house and building our own barn.

The only way I can justify the cost is to make it pay for itself by warehousing my Ebay stuff and the 'company's' equipment. At the least, its saving us the cost of commercial rental space, utilities, insurance, etc. And its a write off because everything in there is technically business inventory.

In my mind, I've added the build cost to the value of our property because it helps my sanity, but realistically I hope for at least 25-35% ROI when we sell the house.

 

[srmofo]

My ROI initially was having a place to store all of my landscaping business stuff indoors away from the thieves.

Now that the business is gone, it provides me with an escape. Its also a relatively cheap hobby and helps earn income on the side.

As far as home value ROI. My home had a virtually unusable shack that would not fit any car larger than a civic. It was ugly, starting to fall over, and almost useless for anything other than the mower. I think it improved my home value but probably not what I put into it, however I built it for me and not the next guy.

Also Im in a neighborhood where not many homes have garages my size and not many homes in my price range have garages my size. Im also in an area where guys are into cars and other shop related stuff.

So IMHO I increased the sell-ability of my home without raising the value much beyond what I put into it.

 

[ddawg16]

The return on investment is directly to you on how much you do and can create in your use of the space. If it cost $15,000 and you save $30,000 in repair cost and replacement cost of automobiles you have had terrific ROI. The immediate ROI is about all you are going to see as they really won't add to property values except for tax purposes. If wood working is your hobby, add the value of each thing built and the amount it would have cost to purchase and then figure your ROI. If car restoration, What would it have cost to have someone else do the work or could you have afforded someone else to do it. My shop has paid for itself several times over on savings on car repair, furniture/cabinets made, welding projects complete etc. I have restored and driven for years at least 6 cars way beyond their natural lives. I hate car payments and have never had them because of being able to fix/paint/rebuild/reupholster cars by having shop space. A $15,000 outlay on materials for a shop and doing work yourself would repay it self many times. Just don't expect the return to be in real estate prices.

A very good assesment...only thing missing is a couple of paragraphs.....

For us, the garage is worth way more than what it costs us....one one thing, I put in a second floor....part of that area is for the kids....they have a TV and all of their toys up there....that means those toys are not in the house.....almost priceless....

I asked a couple of realtor friends about re-sale value......in my case, I could easily add $15K to the price of my house over and exact equivilant house with the stock garage....find the right person....even more...maybe....but it also means that I have an advantage over the othe homes....to the right person....

The

 

[fflintstone]

Kind of like having a sound proof BSDM room in your basement, it is only going to appeal to some people.
In general it is for you not for resale.

 

[BarnFab]

Having just bought in SOCAL from my prospective as a buyer having a shop was a big bonus and I was either buying with one with or making sure I had room to put one and paying less for it.

I wanted turn key and I was happy to pay for it. If it didn't have one then I was keeping $50k on what I bought so I could get one straight away.

So in my case the seller got a good ROI as if he didn't have it I wouldn't of bought it.