How much to spend/expect back in return for renovations?

Accomodation, House and Garden
1
Hey,

Been gathering offers and redone some of my original estimates for replacing kitchen, redo tile floor and paint large part of the inner walls/ceilings and its starting to add up

I was wondering if anyone know of an overview/estimate similar to i.e. http://www.styleathome.com/homes/ren...t-back/a/882/2 or http://time.com/money/3543371/home-r...ttic-basement/ but instead of US market is about the Swiss market ?

i.e. I could imagine the numbers would be quite different since the total price of houses here are so much higher in CH than in US.

Just looking for info to get an indication if i'm crazy or just "normal"

2
Resale value - whether a renovation or of the whole house - is not a priority for many Swiss homeowners, as many Swiss homeowners only leave their houses feet first.

The following is my opinion, based on studying the market in my area, and having toyed with selling for the last ca.10 years. As always, others may think differently...

The only things you can count on to increase value:

If you are able to increase the (legal) m2 living space.

If you have Ausnutzungsreserve allowing the next buyer to increase living space.

General rise in the price of land - but only if your house type/size can keep up with the price, or be renovated/torn down to build to match rising land prices.

The problem with interior renovation is that tastes change quickly - what was done 5 or 10 years ago, although still perfectly serviceable, might not be what a buyer will want today, and even sometimes becomes a liability if the buyer wants to take it out.

We bought 11 years ago. Renovated top to bottom - floors, walls, kitchen, bathrooms, added a bathroom, woodwork, wiring, re-did the facade and roof, new balconies, put in a patio and terrace. Last year we put in a new furnace. Spent ca. 35-40% of the purchase price again. And then there's the garden...

We do not expect to get a penny of that back when we sell, because it was (furnace excepted) done 11 years ago. That's too long ago to be 'im Trend' or even of value anymore.

The things that hold their value - the roof, facade, wiring, plumbing, heating system - are sort of 'invisible' in that a buyer expects such things to be in good working order, only really notices (and low balls your price) when they are not.

Bottom line - IMO, renovate for yourself, for your enjoyment.

If you are only here for the short term and have to consider resale, go Swiss minimalist white.

3
blah, now you ruined my naive hope of someone telling me over night spending 70-80k could be fairly justified (outside just wanting a new kitchen + tile floors renovated + lots of painting to make the house much more lighter

Thanks for your answer (really!) - I now know I just need to go back to convince my conscious not my logic.

4
It's justified if it makes the place a better place for you to live in, just don't expect any return in the investment and you won't be disappointed.

I can give you recent examples of two (identical on paper) houses in our village.

The houses are semi-detached and are mirror images of each other with identical sized plots of land.

House one: recently renovated from top to bottom, new kitchen, bathroom, heating system, repainted etc. Very modern looking kitchen and bathroom (ie not to everyone's taste). Asking price 890 000 chf.

House two : same house without renovations. Perfectly acceptable looking but classic kitchen and bathroom. Dark wood on ceilings in bedrooms. Asking price 720 000 chf.

Price difference 170 000chf

House 1 was on the market for over a year before being removed and the owners are still living there. House 2 sold within two weeks of being put on the market.

The new owners have repainted the rooms and sanded/treated the wooden floors. They also treated the wood on the exterior of the house. They plan to renew the bathrooms and kitchens as and when it becomes necessary but are perfectly happy with them as they are for the moment. Sure they've spent money on the house but nowhere near 170 000 chf and they will have a house exactly as they want it.

5
Aha, expectations will break your heart every time!!

Meloncollie pretty much nailed it, a freshly renovated property "may" attract a reasonable price but depreciation starts the minute the renovations are finished. I believe it is possible to get a positive return on renovations but only on some particular properties, not as a general rule like else where. Again my opinion (and bank valuations reflect this) is the Swiss don't believe that renovations add value, the thinking being that the house/apartment was old so you have only bought it's value back to where it was in the market when it was new, minus depreciation for age.

Some properties fall through the cracks for various reasons and can be cheaper be but mostly it is because they are in the too hard basket ie not valuable to developers, scope of upgrade required is too difficult/expensive for a local, restrictions on who the seller wants the property to be sold to. The problem then is as a DIY punter is renovating to Swiss quality standards compounded by cost and access to quality building materials as a non business owner. Hornbach and Bauhaus have some reasonable imitations of quality products, not saying they are all bad but there is still a difference especially concerning choice. A combination of selective DIY, careful purchasing and finding trades to use those products is the best way, albeit time consuming which you should factor in to the overall cost.

As said above, buying and renovating to live in for several years and breaking even is not a bad outcome if property prices improve over that time. Location and the reason for the value in that area as always will dictate whether a property increases in price more than surrounding properties and areas.

6

About "if property prices improve over that time" My experience is that with an existing property the price improvement more or less covers the depreciation so the price remains roughly constant. Improving prices just means that new properties command higher prices.

I was thinking of selling a couple of years ago after 10 years ownership and asked an official valuer to come and look but he said "Save your money - assuming the property is in reasonable state then assume the same price as you paid". This is in Zürich Kanton.

7
I know someone who was quoted:

Renovate a 150m2 house

Insulate the loft and add as new living space

Remove the attached single garage and build a double garage

Garden design + planting

800k

That matches the cost to build new on the same plot

I posted up a beobachter link on every thread like this - and the values pretty much match against what I was quoted 8 years ago when myself and the ex were contemplating buying a complex of flats/workshop/offices/shops with the then BIL.

The value of a property is basically the structure and the land - everything else is expected to be replaced over time. Reducing the cost of renovation by being able to do work yourself to a high enough standard is the only way you'll close the value gap - and/or buying below the market value.

8
While you probably won't recoup your renovation costs on resale, have you looked into the possibility of tax deductions, either in the renovation year or upon sale against capital gains?

You might be pleasantly surprised - or at least find that some of the sting can be taken out of the cost of the renovation project.

As you are making your plans, a chat with your tax planner might be in order.

(And as you are researching resale issues, have you researched the tax penalty for selling in the first 'X' years of ownership? This differs by canton, as one might expect.)

9
Yeah, this is exactly my worst fear - ending up with having too much "emotionally attached" value in the house to not come up with a proper price.

To be clear, I didn't buy the house to make a profit, nor do I want/expect to make a profit on the renovation - but at least try to get *some* of it back when selling (if ever)

But what I'm hearing is that is not even realistic - best I can do is hope to keep the value of the house *despite* the renovations

10
Yeah, I unfortunately don't have the time/skill to do the construction (I can fine help with the destruction and I kinda think I bought slightly under the market value....but unfortunately there are no longer any houses for sale around here so it is really hard to even compare.

Anyone know of a way to search for valuation/old comparis offerings on a map ?

11
Yeah, I'm looking into this. I know that my original plan of spending ~40k was going to be tax deductible but now where things have started climbing up to ~70k i'm starting to worry if I need to start spreading out the work to make it work.

But yeah, I should look at pinging my tax guy again.

About selling and tax burden around that - this is actually the reason why I considered spending some money on renovation *instead* of selling.

Since we were looking at moving closer to Zurich, not *in* zurich, just around it and was stunned how much more money we would have to put down to just get a house anywhere near our current house standards.

It was like 850.000 vs 1.600.000 ...almost double downpayment and then of course much more expensive mortgage.

So yeah, I backpedalled from that idea and started looking into spending some money on the current house to at least fix the kitchen....which then dragged in the floor/ceiling/painting thing that is making this quite some more than originally planned.

12
I feel your pain. ( )

Despite our tiny rather 'meh' house being a far cry from what I want/need, I am continually amazed at how much worse pretty much everthing else on the market is.

We bought this house as a 'stepping stone', as we had to get our of our rental house. This was a compromise, the best on the market at the time. With our naive American mindset we figured we could sell in a few years once we found the dream house...

I chased after that elusive dream house for 10 years, without any luck. In the decade of searching I don't think I've seen a single property that didn't need at least another half million put into it... and these starting at double or triple my current house.

So I, too, have given up. I may not love my current home, but it's the devil I know. I've almost convinced myself to start renovating again.

I guess the way I stay sane is not to think of my house as an appreciating or depreciating asset (as we do in the US) but rather to think in terms of savings over rent. And from that standpoint the tiny 'meh' house that I don't love has been a very good decision.

Enough rambling - Good luck with your project!

13
From what I've picked up the norm is 1 to 2 percent of the value need to be spent on maintenance per year, or if not spent set aside for something bigger, such as a new roof. This is maintenance, i.e. retaining the value as is, so not new stuff.

The problem with a lot of custom rebuilds such as trying to do something original with that attic or basement space or converting the garage into something useful and a bit different to what everybody esle is doing is that not many people will have the same and so for lack of a benchmark value, potential buyers will consider such modifications to be of no value. So do those modifictaions for yourself by all means if it rocks your boat, but don't consider it an investment. This is probably why so many houses tend to be more less the same in terms of style and amenities.

14
I reckon, by the end of the autumn, I will have sunk around 30,000chf into the house.

I'll have actually only sunk around 5,000chf (materials and skip hire) the rest is an assumption based on labour charges for building a terrace, building a fence, building raised fruit and veg patches and clearing a large chunk of the garden. I also have sufficient materials left over to build a drinks table for the terrace - and I'm now trying to figure out whether I can build my own sun-loungers too.

And to think I only managed an E at GCSE design

15
Maybe merited, we haven's seen a picture yet.............

16
Yeah. Be careful with this. I know of several horror stories where the tax deduction was rejected after owners had already spent the 'savings'.

I also know a "tax judge" who presides over such disputed cases and i was surprised what a hard line he took on some of the issues.

17
Plenty of people on here have - maybe you should just pay attention a bit more

See here

18

By the same token our accountant claimed 100% of our new built garage and terrace over which was knocked back but he did negotiate 50% of build costs as a maintenance deductible as the old garage was not fit for purpose (too small and my wife crashed the car every time she tried to park in there but that is another story). A trip to the accountant with your proposals is well worth while, most of this is not a problem with updating like with like but put a 100k kitchen (just because you can) in an old farmhouse is always going to be a tough call to justify to the tax man. Spread it over a couple of years helps.

19

Evidently your "E" grade wasn't merited !

20
At the time it was - but since then I've been targetting Carnegie Hall