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Answers (6)
- Dan, "the_country_hick"
- Contributions:4694
If you pay for labor the total value will be what you paid for the upgrades maybe less.
If you do the labor yourself you might have some sweat equity of somewhere around the value of the labor you did not pay for.
If you pay $100k cash for the house and then spend another $20k on it using paid labor you might have a house worth about $120k.That gives zero profit.
It is even possible that you would have paid more for installing upgrades than they would add in value. I expect that to happen when "We also would have to replace a single car garage with a 2 car garage" as you will be losing the complete value of the present one car garage as it is torn down. This will lose money not make it.
I would not be surprised to see prices lower in 6 years than they are now. Beyond that possibility you have selling costs approaching 8-10% that will cost you real money.
"Does it make more sense to buy, or to rent? Here is the way to find out for sure."
"Why rent if you could buy for less money? Valid reasons inside."
If you do the labor yourself you might have some sweat equity of somewhere around the value of the labor you did not pay for.
If you pay $100k cash for the house and then spend another $20k on it using paid labor you might have a house worth about $120k.That gives zero profit.
It is even possible that you would have paid more for installing upgrades than they would add in value. I expect that to happen when "We also would have to replace a single car garage with a 2 car garage" as you will be losing the complete value of the present one car garage as it is torn down. This will lose money not make it.
I would not be surprised to see prices lower in 6 years than they are now. Beyond that possibility you have selling costs approaching 8-10% that will cost you real money.
"Does it make more sense to buy, or to rent? Here is the way to find out for sure."
"Why rent if you could buy for less money? Valid reasons inside."
- Clay Branch, "Georgia Loans"
- Contributions:7835
So, money paid toward principle would not really be considered as money in my pocket?
Socal answered it perfectly. The money paid towards principal is money in your pocket but not gain, as Socal stated your gain would be 0 and negative if you pay to sell the home and/or give a seller concession.
Socal answered it perfectly. The money paid towards principal is money in your pocket but not gain, as Socal stated your gain would be 0 and negative if you pay to sell the home and/or give a seller concession.
- Bert Pope, "bertpope"
- Contributions:66
I could spend an hour on just this question. The key word in your senario to me would be utility.
Make your home perfect and enjoy. Many folks think at the end when you are trying to sell then remodel for selling, I believe that is foolish.
Congrats! you are already ahead of the game. When you go to sell in a few years, guess what, people like yourselves will appreciate the modifications and will pay for them at a premium value.
I'm going to ask you one question: did you use the fact that it had only one garage and a poor master bath when negotiating? I bet you did.
Where did you buy it in relative value (with 1 car gar)as to where you will sell it(w/ 2 car gar). The same with the master bath too.
Utility is key with any investment property i.e. resturant, office, etc.
There are many other benefits like other smart realtors here have pointed out, enjoy that home.
Merry Christmas.
Make your home perfect and enjoy. Many folks think at the end when you are trying to sell then remodel for selling, I believe that is foolish.
Congrats! you are already ahead of the game. When you go to sell in a few years, guess what, people like yourselves will appreciate the modifications and will pay for them at a premium value.
I'm going to ask you one question: did you use the fact that it had only one garage and a poor master bath when negotiating? I bet you did.
Where did you buy it in relative value (with 1 car gar)as to where you will sell it(w/ 2 car gar). The same with the master bath too.
Utility is key with any investment property i.e. resturant, office, etc.
There are many other benefits like other smart realtors here have pointed out, enjoy that home.
Merry Christmas.
- Natasha Kennedy, "Natasha Kennedy"
- Contributions:487
Look at the data in that neighborhood and the trend. If you are buying the most updated house and the most expensive house in the neighborhood, most likely, you won't returt your money. IT's very hard to predict what is going to happened exactly in 6-8 years. Please don't discount the fact of comfort and pleasure of living in that home. Memories you are going to build in that house, your first house, are priceless.
- user005699
- Contributions:11
So, money paid toward principle would not really be considered as money in my pocket?
- SoCal_Engr
- Contributions:5663
If you sell it for exactly what you paid, plus the money spent fixing it, your gross gain will be zero. Your net gain will likely be negative, as you will have selling expenses that will need to be deducted from the proceeds.
Of course, there are more things involved (i.e., potential tax savings due to interest/taxes paid, rent-v-mortgage, etc.), but that goes beyond your direct question.
Of course, there are more things involved (i.e., potential tax savings due to interest/taxes paid, rent-v-mortgage, etc.), but that goes beyond your direct question.
Determining resale profit of a home we plan to be in for 6-8 years...?
My question...(hypothetically speaking) if we planned on only living in this house for a short period of time, 6-8 years, and sold it for the exact amount we paid for plus the $20,000+ we put in to it, how would we determine the profit margin from the home sale? Is there an average % that you suggest we consider?
Of course no one can predict where the market will be in that time span, but just for sake of this question, pretend it remained exactly the same...
Thanks for your help
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