I would love a 320% ROI !!!
I am sure that any investor would love to get that kind of Return On Investment --- but I doubt that even Warren Buffet would count those kinds of chickens before they are hatched.
The Community Development Authority is sponsoring a Facade Grant of $800,000 for the apartment building at 3575 N. Oakland. According to a story in www.shorewoodnow.com by Marie Rohde:
The building is currently assessed at $3.5 million.
The CDA says the facade improvements will increase the value of the building by $2.256 million and boost neighboring properties by $305,000.
Doing the math, $800,000 invested with a return of increased value of $2,561,000 is a ROI of 320%.
As a real estate broker, I have been involved in many transactions involving renovation, with single family and multi family properties. I have never heard of anyone getting that kind of ROI with just a new facade ....
I would certainly like to see a Certified Appraisal of both the value of the building as is, and the value of the building after the facade improvements. Due to the uniqueness and complexity of this project, such an appraisal would be mostly in narrative, and it would be interesting to see the rationale the appraiser used, and the comps that justify the conclusion.
As a very imperfect comparison (once again considering the uniqueness and complexity of the project) I have printed below the kind of return on investment a homeowner would expect for various renovations.
This is somewhat "apples to oranges" -- but note that on average, no project even pays back the cost !! The returns are all less than 100%.
You can find a number of similar charts and comparisons on the internet --- potential Seller are always interested in ways they can sell their property for a higher price.
Just for fun --- let's pretend that a 320% ROI is doable on this project --- and can be substantiated to the satisfaction of investors/bankers/etc ------- then why does the Village have to finance the project ? If it is for real --- drop a dime, call Warren Buffet --- those are the kinds of numbers that would probably get his attention.
What's YOUR TAKE --- please leave your comments below.
|
Description Of Remodeling Work |
Job Cost |
Resale Value |
Cost Recouped |
| Minor Kitchen Remodel
Replace cabinet dooors, oven and cooktop, laminate countertops, sink, faucet and floor, repaint |
$8,507 |
$8,030 |
94% |
| Bathroom addition
Add a second bath to a house with 1 or 1.5 baths;include ceramic tile and linen closet |
11,645 |
10,593 |
91 |
| Major Kitchen Remodel
Redesign kitchen, replacing all of the above, plus built in microwave, custom lighting, island. |
21,262 |
19,190 |
90 |
| Master Suite
In a house with 2-3 bedrooms, add a 24-foot by 16-foot master suite with walk-in closet, whirlpool tub, separate shower. |
36,472 |
30,530 |
84 |
| Attic Bedroom
In a 2-3 bedroom house, convert unfinished attic space with bedroom and shower/bath. |
22,840 |
19,084 |
84 |
| Two-Story Addition
First-floor family room and second floor bedroom with full bath. |
55,687 |
46,236 |
83 |
| Family Room Addition
Add a 16- by 25-foot room with skylights, hardwood tongue-and-groove floor, fireplace. |
31,846 |
26,483 |
83 |
| Bathroom Remodel
Update existing bath with new tub, toilet, vanity, medicine cabinet, lighting, tile. |
8,423 |
6,480 |
77 |
| Replace Windows
10 new 3'x5' aluminum-clad windows with trim. |
6,112 |
4,536 |
74 |
| Replace Siding
1,250 square feet of new vinyl or aluminum siding and trim. |
5,458 |
3,983 |
73 |
| Deck Addition
16'x20' deck of pressure-treated pine including built-in-bench, railings and planter. |
6,172 |
4,459 |
72 |
| Home Office
Convert existing room into office with custom cabinetry and re-wiring for electronic equipment |
8,103 |
5,423 |
67 |
| Source: Remodeling magazine, 1996-1997 Cost vs. Value Report. |
