Real Estate Agent · Wellington, CO · Member since 2017 · 58 posts · 17 votes
Hello all, ty for reading. ill throw out all the numbers i know so far
PP of my house was 434k a few months ago. it is a new build, 3 bed 2 bath ranch 3 car garage and 1480 above grade finished with a basement the same size on .17. Had two other realtor's price it at about 460-465k right now. nearest comp (5 bed 3 bath, 2700-2800sf 3 car garage ranch) came in at 510k but had about a 200sqft front porch and .19 acres instead of .17 like mine. so since i have a 3 bed 2 bath, id finish the basement which DIY would cost no more than 15k if i finished 1000sqft of it to keep some for storage but to also add 2 bed and one bath. so if value now is at 465k and it would only get it to 490k, and i spent 15k to do it, that might mean a gain of 25k in valuie. worth it? long term plan is to keep the house, do a heloc to take out enough to buy a 4-6 MF income producing property in a different state where i grew up OR just outright sell the house in one or two years. thoughts? need more info? northern colorado market
Contractor · Denver, CO · Member since 2009 · 399 posts · 166 votes
5y
For a 10k gain in value... I think it is an absolute waste of time and money... but I also think your numbers are wrong. That being said, if you have a year or two to do the work yourself go for it. I think finishing a basement is an easy value add (assuming all the other factors make sense, location, ARV, etc. ) However, if you bought the new build at the price of a similar property with a basement already finished... not sure the equity will be there unless the appreciation/inflation ride goes on... Finishing a basement of that size is a lot of work. Most basement guys I know are doing a job like that in 3-5 months depending on how far they take it and how many subs they use versus self performed work. If you don't own the tools already, that alone could run you about 2500 or more depending on how many of the finishes you are planning on doing yourself.
Rental Property Investor · Pittsburgh, PA · Member since 2019 · 530 posts · 511 votes
5y
No idea on the market there so probably won't be of much help. I would call the lot size a wash, there just isn't that much of a difference. My biggest concern is the size difference. I never like using comps more than 10%/250sqft different. Your difference is over 75%. There is a cost efficiency where at a certain point cost per sqft decreases the more that is added (both construction and value). Is that entire space above ground? If so, then your below ground sqft may not be as valuable. Also, Realtors, while many are trustworthy, have an inherent flaw in that the higher they value a house, the more they potentially could get in commission. So there is a subconscious bias built in there. Pretend you are a lender - actually spend $400 and order an appraisal that has current value and professional (non-biased) opinion on after repair value based on the rehab you have outlined. Then in 6 months when you do the work and go for a HELOC, you could provide that appraisal to the new appraiser for the bank loaning the money. Since they all follow the same guidelines, and it was an unbiased 3rd party, there is significantly higher chance your refi numbers will come out closer to what was expected than just trusting Realtor opinions (after all - banks don't hire them for an unbiased evaluation of homes prior to lending).
Real Estate Agent · Wellington, CO · Member since 2017 · 58 posts · 17 votes
5y
Some things need to be cleared up.
There is no subconscious agenda. They are not getting a commission. I just bought it. I am also a licensed broker in this state. The numbers are legit. But thank you for pointing out how they could just be deceiving me. I wouldnt post those numbers if i even thought they were. Even the builder himself said he would have priced it higher had he known the market would have risen.
The "comp" is what my home would be most like - between 2700 and 2800sf finished. Thats why I used it. I needed a comp to see what the closest 5 bed, 3 bath .17-.19 Ranch with finished basement was going for. BOTH homes have one main level and one basement level.
Why would I try to compare a 3 bed 2 bath and try to comp it against a 5 bed 3 bath? Of course they are nothing alike as of now.
Real Estate Agent · Erie, CO · Member since 2014 · 1k+ posts · 512 votes
5y
I would hold for now and reevaluate when lumber prices and other material costs come down some more. Could make quite the difference in your pricing. Did the builder put full egress window wells in already? Are the rough ins in a usable spot?
Contractor · Denver, CO · Member since 2009 · 399 posts · 166 votes
5y
For a 10k gain in value... I think it is an absolute waste of time and money... but I also think your numbers are wrong. That being said, if you have a year or two to do the work yourself go for it. I think finishing a basement is an easy value add (assuming all the other factors make sense, location, ARV, etc. ) However, if you bought the new build at the price of a similar property with a basement already finished... not sure the equity will be there unless the appreciation/inflation ride goes on... Finishing a basement of that size is a lot of work. Most basement guys I know are doing a job like that in 3-5 months depending on how far they take it and how many subs they use versus self performed work. If you don't own the tools already, that alone could run you about 2500 or more depending on how many of the finishes you are planning on doing yourself.