Wednesday, July 4, 2007

an investment in my home

I am currently in the process of making the largest investment I have ever made in my home, aside from my down payment when we purchased the house. I am putting in a stamped concrete step, wide walkway, and back patio in place of an old deck that I have recently removed that existed when I purchased my house about two years ago.

This coloured, natural looking stamped concrete work is costing me $3,816 after tax. This addition will no doubt add much convenience and enjoyment to our every day lives during the non-winter months.

The question is though; how much value will this add to my home?

When updating my home's worth for the month of July, on my July 15th net worth statment, how much should I increase the value by on my balance sheet? I like viewing expenditures as investments, it helps me feel better about spending my money.

I wonder if there is a resource (website, etc.) out there, were they give you a percentage payback on home projects such as this. For example, does putting in a concrete feature in your home landscape like this add 100% of it's installation value to the value of your home, or is it more like 150%, 200%, or even 300%.... I remember seeing something like this when I bought my house, but I don't recall where...

7 comments:

Thicken My Wallet said...

Good luck with the reno. To answer your question, I recently blogged on this topic:

http://www.thickenmywallet.com/blog/wp/?p=59

FourPillars said...

I wouldn't automatically assume that every reno cost can automatically be added to the value of the house.

The reality is that unless you do a major reno, changes in the real estate market will have more affect than upgrading components of the house.

That said if you want to add the cost to the value of the house for your own records, then I don't see a problem with it.

Mike

moneygardener (AKA investor99) said...

Thanks for the comments and link.

4P,

I agree with you, however I believe that this reno will add value.

Anonymous said...

http://www.readersdigest.ca/mag/2002/08/reno.html

Anonymous said...

I agree with fourpillars. $3,000 of reno into the house will be largely irrelevant. Do the reno because it benefits you and your family now, not because of any effect it will have on re-sale value.

On the same point, take a read of this article: http://drhousingbubble.blogspot.com/2007/06/putting-home-sellers-on-couch.html

Anonymous said...

Looking at your title "an investment in my house", one further comment is, from an economic perspective, it's probably not correct to categorize this expenditure as an "investment" (ie, you'll get the principal back with a return), but more as an "expense" (the money is gone, however good it feels over the life of the thing you're creating). (Though fourpillars is probably correct that tax rules would treat the expenditure as an addition to capital.)

If you are truly wanting to "invest" the $3800 you'll be spending, find a more suitable target.

moneygardener (AKA investor99) said...

'As an investment' would truly be a secondary reason for the addition. Primarily it is an amazing feature for everyday life.

In the end this project, which is now completed and looks fabulous, will probably make me hold on to my investment (my home) longer...