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Question: I live
in a metropolitan area. The neighborhood is upper middle class, with a
range of ages and sizes of families. It is an area that children, who
grew up here, years ago, are returning because it has remained a very stable
environment and good for raising children and pets. It is situated
right next to a growing university, and the price of housing has not been
affected by the downturn in national home market values. Properties
are in the $450K to $800K range with some very nice ones exceeding $1
Million.
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| There are very few
detached buildings on residential sites in our housing development (i.e., a
green house, detached garage or workshop). There are also few swimming
pools.
My question is that I want to build a
detached greenhouse and workshop building on our property however my wife
says that I will not get a full return on investment (ROI). The cost
of building the greenhouse/workshop is around $5K - $7K on a piece of
property worth around $650-$700K. The plan is to build it to match the
lines and siding of our existing house. |
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It will take up approximately 20-25% of
the usable yard. So how do I get some hard facts about such an endeavor
and its ROI?
Answer:
Your best bet is probably to talk with some local realtors about the interest in
homes with detached buildings. In my opinion, if the detached building is
designed to serve multiple purposes, and is aesthetically attractive, you have
a good chance of getting your return on investment and maybe even more. From my
experience there are many potential homeowners out there interested in having
homes with extra storage space, or play rooms for their children that are
detached from the main home. Having additional separate space that has water and
electricity also opens the possibilities for small office space for
self-employed homeowners.
In addition, at around 1% of the value
of the property the investment is "in-the-noise". If someday you decided to sell
the home, just convincing your prospective realtor to take a 1% lower commission
rate will enable you to recover your investment, and that's at today's home
prices. Usually there is some give in real estate commissions so keep this in
mind.
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Finally, you also have to look at
the non-economical side of this project as well. If you enjoy woodworking
and gardening then a $5-7K outlay amortized over 5, 10, or even 20 years is
relatively a small investment in a hobby.
My advice, check with your local
building inspector and read any covenants you may have in your housing
development to ensure there are no restrictions to detached buildings on
your property. If the building inspector accepts your plan and there are no
covenant restrictions, I'd say go for it and enjoy your new space. |
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