Let's do some math, assuming the Zestimate is right. We get 3% less (see Comparables in the Neighborhood), so: $703,957.
The Real Estate Excise Tax (REET) is 1.28%. Assume we pay the buyer's and seller's agents 3% each (standard, but potentially negotiable).
REET - $9,011
Agents - $42,237
Net proceeds - $652,709
Various costs include the $4500 soils engineer, the $3600 surveyor, $1500 in building permit fees, $3000 for the structural engineer, $7000 for the furnace, and $1500 for landscaping so far. Rough numbers, but I'm in about $21,100.
Redoing the roof and gutters is in the $20,000 range, and I think serious landscaping probably gets there, too. New kitchen appliances, alone, would be $7000. New cabinets and any remodeling? $15,000? That's $62,000 I haven't spent yet, and doesn't include painting, new doors. Say $65,000. The Master Bath? Bath 3?
Adjusted Sales Price - $652,709
- Cost Basis ($467,000 + $21,100) = $164,609 proceeds
Do nothing (no roof, no landscaping) - 33.7% return on original investment
Do $65k (as described) - 18% return on original + $65k investment
Do $110k (bathrooms, remodeling) - 9.1% return on original + $110k investment
Obviously, anything more than a $164,609 remodel starts costing money (unless it increases the sales price).
Plan A
Do the $65,000 as described
Pour concrete, frame walls--extend garage, extend breezeway, remodel bathrooms, refinish floors
Budget: $110,000
Target 2018 asking price: $750,000
Plan B
Do the $65,000 as described
Budget: $65,000
Target 2018 asking price: $730,000
Plan C
Do the $20,000 roof, spend a small amount improving everything in general.
Budget: $25,000
Target 2017 asking price: $700,000
Everything is subject to debate, but it helps to walk through the numbers every once and a while.
| Asking | Sales Price | REET | Agents | Net | Purchase | Sunk Costs | Addl Investment | Profit | Total Inv | ROI | ||
| $725,729 | $703,957 | $9,011 | $42,237 | $652,709 | $467,000 | $21,100 | $0 | $164,609 | $488,100 | 33.72% | ||
| Plan A | $750,000 | $727,500 | $9,312 | $43,650 | $674,538 | $467,000 | $21,100 | $110,000 | $76,438 | $598,100 | 12.78% | |
| Plan B | $730,000 | $708,100 | $9,064 | $42,486 | $656,550 | $467,000 | $21,100 | $65,000 | $103,450 | $553,100 | 18.70% | |
| Plan C | $700,000 | $679,000 | $8,691 | $40,740 | $629,569 | $467,000 | $21,100 | $25,000 | $116,469 | $513,100 | 22.70% | |
| Limit | $766,660 | $743,660 | $9,519 | $44,620 | $689,522 | $467,000 | $21,100 | $145,000 | $56,422 | $633,100 | 8.91% |
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