So your thinking of renovating and/or buying in the Green Hills area. Though I’m targeting my area of interest, Green Hills, the formula for determining renovate vs purchase are fairly standard. How do you determine what to spend your money on most effectively. As property Values start to rise so do renovation projects, up 9% in 2012.
Basis of cost is your tax assessed value, not always accurate but everyone has one and they are usually conservative. The Appraisal Institute standards of valuation are as follows:
- Kitchen 10-15%
- Bathroom 5-10%
- 1/2 Bath 5%
- Finished basement or attic 10-15%
If your Green Hills Home tax value is $400,000, and you would like to renovate your kitchen, you would not want to spend more than $60,000 on that square footage. But, if you have a mortgage, divide the mortgage balance by the value then multiply the equity by 10% to 15%
$400,000(Home Value) – $200,000(Mortgage Balance) = $200,000(Equity)
$200,000(Equity) x 15%(Kitchen Value) = $30,000(your renovation budget for your kitchen)
Ta-da!!!!! There is your renovation budget vs. moving expense. Average asking price for all the Green Hills Real estate and surrounding area is about $200 per sq ft. Renovating and/or buying in the Green Hills is big business. Using this formula will ensure a right decision almost every time.
Boulevard Real Estate Group 