Return On Investment For Fence And Garage

[ReverseUrMtg]

Hi all. I have a client asking if they would receive a return on investment for having a garage built and also having a 135' fence replaced on their property. The cost of doing these projects is $12K. This is for a FHA insured reverse mortgage loan (a refinance transaction, not a purchase). Currently, they do not have a garage as they converted it into a room. Most houses in this area probably have a 2 car garage. The house is in Rowlett, Texas (a suburb of Dallas).

My initial thought is no, they probably will not get that much of an improved value, but I want to ask the experts. The flip side of the coin is that they might see a slight decrease in value since they do not have a garage and most of the other houses do. I believe the fence is there but may just need to be replaced due to wear and tear. Is it logical to make these assumptions?

Any feedback would sure be appreciated.

Thanks,
Laura

 

[GA Benny]

Most likely they will see some increase in value for these features but very rarely will they see an amount equal to the cost. Perhaps if you tell us where the property is located, someone more familiar with the market could give you some better details.

 

[Mr Rex]

Since this is a reverse mortgage, I would suspect that its not a good idea monetarily for the reasons GA B indicated. The increase in value due to diminishing returns would hardly move the needle in the amount the borrower would receive as part of the reverse process. That said, a retiree may get more out of a garage than the monetary return. Same with fence if there is a real compelling reason for the fence (good fences make better neighbors out of bad ones)

 

[ReverseUrMtg]

Thanks! That's what I thought but I wanted to confirm.

 

[Howard Klahr]

Currently, they do not have a garage as they converted it into a room. Most houses in this area probably have a 2 car garage. The house is in Rowlett, Texas (a suburb of Dallas).

Did the garage conversion occur with the required permit? If not, does local code require a garage as part of the improvements in the subject development? Based on the answers to these questions, there may not be a choice in order to bring the property into compliance with local code.

 

[PhillyNJ]

Most likely they will see some increase in value for these features but very rarely will they see an amount equal to the cost. Perhaps if you tell us where the property is located, someone more familiar with the market could give you some better details.

This is it. I get asked this question all the time. I never give advice on value...I only tell them do things to their house because they want to...not because it will increase value.

 

[Elliott]

I recently read an article (can't remember where) that said, "So you want to remodel your kitchen" and it essentially said, "So if you remodel your kitchen and its a 25 year old house, people are just going to say, its a 25 year old house with a remodeled kitchen, but the baths aren't remodeled and everything else about the house is 25 years old, so why remodel the kitchen." I don't know why people do anything if all they are concerned about is ROI. Maybe the correct response is, "If you have to add a garage and fence, your probably better off selling the house and buying another property with a garage and fence already completed, and that is the best way of maximizing your ROI."

 

[Tim The Enchanter]

"So if you remodel your kitchen and its a 25 year old house, people are just going to say, its a 25 year old house with a remodeled kitchen, but the baths aren't remodeled and everything else about the house is 25 years old, so why remodel the kitchen."

Because then you have a nice kitchen.
Of course you will then want to do other projects too.

 

[Terrel L. Shields]

Of course you will then want to do other projects too.

No, your wife will want to do other projects. I can show you a house that was remodeled twice in the first five years of its life. When a new house went up across the street bigger than theirs, she nagged him until he did an 800 SF addition. And then they added an upgrade kitchen because the appliances were out of style.