How much does a shop build add to property value? [Archive]

Mark Wedel

12-20-2023, 12:12 AM

I have no idea (not having done that), but I would think a lot would depend on the shop and whether it could be repurposed as something else. If the only possible use is ever a shop, it is going to have less value than if it can be used as a garage, or extra living space (water & sewage to put in a bathroom for example, so maybe could be an ADU down the road which could get rented out or act as in in-law quarters).

I suspect all else being equal, a house with a shop is going to be cheaper than a house without a shop and then building that shop. But this also presumes there is a reasonable inventory of houses with shops (and your not giving something else up, like location, by buying one). And if you build your own shop, you are getting exactly what you want (no compromises on size, layout, etc) - a house with a shop, depending what it was used for, may still need a bit of work to bring it up to the standards you want.

Not sure about other states, but proper tax assessment rules can vary a lot state to state. In California, with prop 13, if your house has gone up a lot in value and add a shop that cost 200K, your property tax assessment will go up 200K, even if the actual property value has not gone up that much because even with that 200K increase, your assessed value is probably still less than current market value.

Michael Schuch

12-20-2023, 5:29 AM

When I purchased my current place, about 20 years ago, I purchased a shop with a house and some other crap in front of it. I knew at the time that I wouldn't be able to purchase a house and be able to build a shop in any reasonable length of time so a shop was very high priority for me.

roger wiegand

12-20-2023, 8:05 AM

A shop, like a swimming pool, may add or subtract value to/from a property unless, perhaps, you live someplace that permits accessory dwelling units and the shop is built such that it is easily converted to living space. I'd assume, at best, a return of 20-30% on money invested in building a shop, in line with most other home improvements. So yes, way better to find a property that already has a shop building.

A shop building is going to have great appeal to a small number of buyers, be a negative to some, and have essentially no value to most. Anything that makes a property "different" will limit the pool of interested buyers.

Zachary Hoyt

12-20-2023, 8:10 AM

I don't know. When I bought my house the assessment was high at 72k for a 2br, 1ba, shell that needed to be gutted, with aluminum siding and a good metal roof on the main part, and the kitchen roof and floor about to collapse. Now I have repaired the house and added a bedroom addition, a half bath, and a porch, and built a 16x32 workshop building in the yard, and the taxes have not changed at all. As far as I can tell the old and new assessor have never looked at it. I don't know if I should say something, but so far I have just let it go.

Maurice Mcmurry

12-20-2023, 8:31 AM

Lenders, Townships, Insurance Underwriters and Real Estate companies have standard formulas for the value added by having a garage. The value added by accessory buildings is also standardized. Garages add more value than workshops in our area. Location will be a big factor. You can look at comparable properties on Zillo or Realtor.com to get a general idea. In the wrong area the value of a workshop could be diminished by the status cuo. I built a nice garage. Our value added does not cover the added expense of having made it nice. I am also un-able to get affordable replacement cost insurance for the garage-shop. Our insurance company will only insure the garage shop in full as a business with its own policy. Our insurance bill would more than double if we raise the garage value from their maximum, ($6000) to what I wish it was insured for ($100,000).

Bob Riefer

12-20-2023, 8:57 AM

Our realtor felt that our 2-story, 25x30 outbuilding more than offset our investment for a couple reasons:

1 - Our space is very versatile (the 1st story could be repurposed as a garage, a yoga studio, a business office etc. And the 2nd story is fully finished as a stand alone apartment)

2 - We managed our costs by doing a lot of the work ourselves (in our case, I saved us over $100K... but any bit of cost offset helps of course)

3 - We live in an area where people want land and utility spaces (this can help with the price, and also with speed-to-sale)

4 - We didn't "overdo it"... The building fits the property, complements the house, and generally is an asset to the neighborhood

Maurice Mcmurry

12-20-2023, 9:04 AM

According to the limited wisdom of Zillows Z-Estimate. Our garage shop makes our property worth only $2800 more than the neighbors property with no garage. Our tax assessment increased by a few thousand dollars when we replaced the old garage (16 x 24 metal building), with the 22 x 40, nice residential construction, garage shop. These numbers are based on curbside appraisals. When it is time to sell we will have a real walk-through appraisal done. In hindsight I would have made the shop attic a legitimate apartment in an effort to increase the value added.

Jim Becker

12-20-2023, 10:09 AM

My new shop building bumped the assessed value of the property for tax purposes about 10% of the cost of my building and about a grand of taxes. From the standpoint of resale, it will certainly enhance the property value, but by how much will depend on the "when" simply because of how real estate values fluctuate over time. Near term, the bump will not be as much as it likely will be in say, ten years. So "in the moment", I probably would not recover a high percentage of my $50K investment, but that percentage will increase over time, assuming real estate continues to grow in value over that same time.

Edward Weber

12-20-2023, 10:22 AM

Location
Out here (and some other areas) basements and attics are a thing of the past. Meaning homes have no storage. Any onsite multi use building is a positive, how much depends on too many things to list.

Jack Frederick

12-20-2023, 11:04 AM

Having built a 30x34’ 1000 sq ft shop on our 1.5 ac place and sold it this past Feb there were a lot of discussions about the shop, its value and uses. the shop had a view out to the west that was terrific and there was a 15’ covered deck on it. The new owners a young Dr’s family are cutting it in half with a petition down the center. It had a 10’ ceiling and the windows on that side were set high for bench/machinery access. It being a slab, they are building a 1’ floor which brings the sill height back into residential range. So, to the question. Yes, it is a shop, but can it be built for future multi use? It is worth consideration as you lay it out and with the right “features” there is value there in a sale. How much? That is a trick question;)

Michael Burnside

12-20-2023, 11:18 AM

I built my home 3 years ago. I built an attached ADU of 1k sq-ft for my in-laws and I built a 1.5k sq-ft detached shop. The ADU added 250k to my home value. The shop added 0k. My realtor/appraiser friend told me that shops do add value, without question, and will likely pull in some dollar amount when being sold but they are not strickly something tangible like an additional living space. That said, I did build my shop to have an 18'x12' door so that if I ever sell, someone with an RV or boat could repurpose the space easily. Thereby increasing the pool of potential buyers for my home. I have no plans to sell, but it was a consideration when I built it :)

If anything, my shop costs me more since I have a rider on my insurance policy to cover all the crap inside LOL.

Jonathan Jung

12-20-2023, 1:29 PM

I'm hearing from you all that if I build a shop, the best is to design it such that it could serve multiple uses, and thereby multiple owner types.

Layout could be around 2000sqft of one big open space, maybe 40x60, with an enclosed mezzanine of about 1/3 that footprint, accessible by a nice-looking stair. It would have water, sewage, and electrical, windows of residential height, and only 1 overhead door. The overall look would suit our area, wood cladding, nice-looking doors, steel roof.

Floor would be hydronic polished concrete and sealed, so it would look nice over time.

Someone could use this for an ADU, events space, any kind of work / art / athletics / gallery / studio. As an ADU I think the next owner would just have to limit it to 1000-1250sqft depending which county we buy in.

All this said, we aren't planning on moving, but it's nice to know we sank money into something that's well thought out.

Jonathan Jung

12-20-2023, 1:39 PM

I just heard back from my realtor. He thinks a shop could add to the property maybe 75% of it's build cost.

Michael Burnside

12-20-2023, 1:41 PM

As an ADU there are a lot of rules/regulations/fire codes (don't get me started on this one)/etc. that you have to work through. Some counties would not even allow a detached ADU unless you meet certain egress/ingress/lot-size requirements. An ADU also requires, at least in Colorado and my county, a completely different division for approval, review and inspection. Trust me, I know this intimately.

That said, thinking about the use cases for other things is a good idea.

Mark Wedel

12-20-2023, 2:32 PM

Construction, zoning, taxes, etc, are very location specific.

In many parts of California, due to housing shortages, ADUs are now much easier to build. So talking to local agents is certainly the right call, as they will have an idea of what it takes to build any such space, and value it generates.

Dan Barber

12-20-2023, 2:41 PM

The forecast on value increase can only be a guess. It's all going to come down to how well the design complements the property and the local neighborhood, also it will be highly dependant on the potential buyer. When we sold our property in TN 5 years ago it had a very nice 30 x 40 with three overhead doors that had a stone wainscoting and metal colors to match the house. Our realtor actually targeted car enthusiasts in their marketing which I'm sure helped find the right buyer.

Jim Becker

12-20-2023, 3:12 PM

Jonathan, Michael makes a good point. Check what the ADU regulations are for your jurisdiction so you know what might be necessary to insure that your structure would have the option to be used that way (or even at all). Having the plumbing is a really good thing for many uses, but actual "residential" does raise the bar. And for good reason.

There is an increasing trend to permit detached ADUs in single family residential zoned areas across the country, but it's a slow process and only starting to get some traction. The reason is to permit more housing options that are currently prohibited by long time regulations made when densities and needs were different.

Daniel O'Neill

12-20-2023, 4:53 PM

I had a chance to walk our property with an appraiser during the re-appraisal for a HELOC. The fence added more than the shop even though it had electricity, natural gas. He said they just don't add much to the value of the house. Suburbs of Chicago, IL. It was a selling factor to me but in hind sight I would have rather built from the ground up. There is a lot of good advice in this thread that I won't be able to take advantage of because the shell was up before we bought.

Mike Rambour

12-20-2023, 6:13 PM

I figure I added less than half of my build cost to the house value, but that is something for my daughter to worry about when I am dead. FOR ME (might be different for you) I didn't care if it added value or not, it greatly added living value to ME. I enjoy my shop, its too small at 22 x 40 but it's the biggest the city would allow me to build. You do in my opinion have to look at the living value, how much will you appreciate the shop while living there, for me it was a no brainer since I am not moving EVER and have no mortgage so I can say that.

Paul J Kelly

12-22-2023, 1:19 PM

I just finished my shop.

Where we live in CA, ADU's are a thing.

We built it with the idea that we may rent the space if we ever move from CA. We do not plan on ever selling the home because of the value/rate we have.

It is 990 sqft with 10' ceilings, 2x6 construction, flat floor, fully permitted with a full bath. It also has a separate way to enter the backyard to get to it. We could rent the main home and the 'ADU' separately in the future.

So the value is dependent on what your plans are. For us, rental is the win for us.

PK

Carl Beckett

12-23-2023, 7:43 AM

Whidbey Island is a very unique place.

Consulting with more than one local realtor is a good idea. Consider their inputs on features/construction details that add value (plumbing, power, etc) as well as permits and building to code.

Maurice Mcmurry

12-23-2023, 8:09 AM

Whidbey Island is a very unique place. I just watched a google images slide show and read some of the wiki info about Whidbey Island. It is indeed a very unique place, beautiful too!. My hope for the future is big beautiful shop with a small minimalist apartment attached. If it could be in a beautiful place that would be OK.

Leigh Betsch

12-24-2023, 1:04 PM

I attached my shop to my house. I designed it to be an obvious expansion to the living space. It also looks very nice with the current architecture. If you think a bit outside the box I think you can increase your real estate value. I expect that my shop has added more value than a stand alone shop building.

andrew whicker

12-25-2023, 11:14 AM

Interesting. I'd think it would depend on the buyer. Like your price may seem high to people not interested in shops (majority) so you won't get as many bites. But if the right buyer comes along then you can sell at your higher price.

Zachary Hoyt

12-25-2023, 12:01 PM

My current house is probably going to be hard to sell if and when the time comes that I can build a new house. It would work for a tall (6' or more, probably) eccentric person, so I'll have to hope one of them is in the market for a house here then. The shop building is more flexible, but all the high shelves and the high counters in the house would not work for a shorter person.

Bryan Hall

12-25-2023, 12:15 PM

Lots of variables that will, or wont, give you a return on your investment. We talked with quite a few different professionals on this and here is what we got:

A shop will add essentially zero value to the property. It adds taxes and insurance costs. 99% of people buy homes because of the home on the property. They don't buy shops with a home on the property. If you want ROI then it needs to be easily upgraded to an ADU and located in a place where people want to rent. Every home you look at can have different zoning requirements around this and it is not a straightforward process in most circumstances.

While your idea of a multi-use space is attractive, keep in mind that many home shops are not zoned to be legitimate businesses and if you start having significant amounts of traffic coming to and from your home it can result in troubles for you.

While a realtor can be an initial point of contact for these questions, I would highly recommend doing your own due diligence because their job isn't to help small business owners thrive, its to sell homes, and they are undoubtedly going to miss nuanced details (not intentionally) that will be important, or even deal breakers, for you when the time comes.

andrew whicker

12-25-2023, 12:41 PM

While your idea of a multi-use space is attractive, keep in mind that many home shops are not zoned to be legitimate businesses and if you start having significant amounts of traffic coming to and from your home it can result in troubles for you.

While a realtor can be an initial point of contact for these questions, I would highly recommend doing your own due diligence because their job isn't to help small business owners thrive, its to sell homes, and they are undoubtedly going to miss nuanced details (not intentionally) that will be important, or even deal breakers, for you when the time comes.

This is so true. I always imagine the ones running a business out of their residential property must live in a rural place. I have all my mail deliveries go to my house, but having an actual commercial lot for lumber deliveries is great (and no one can question me about it). Leasing commercial has downsides obviously, but I can't imagine running a business out of a residential lot unless I was living in the country. And neighbors are a huge unknown. A new one moves in and suddenly you're getting visits from the city. Seems risky. Too risky for a big down payment in time and money where I live. I also like having my "work life" a little more separate from my "life life".

I also see a lot of questions come up here regarding electrical requirements / 3 phase converters. My commercial shop has 600 amps of low voltage 3 phase service. If I'm looking at big tooling, I don't take into account electrical requirements except for curiosity. Obviously may have to add a new circuit, but I'm not going to run out of juice.

Lots of people run commercial shops on their properties, so I know it can be done. I'm always a little curious how they do it on the legal side.. I always assumed they were keeping it on the down low with the assumption that the city / town / unincorporated area, etc doesn't really care. Especially in farm country.

Zachary Hoyt

12-25-2023, 12:52 PM

I talked to the code enforcement officer and my insurance agent about the workshop being used to run a business. My deliveries are not more than what a hobby woodworker might get, except for when I have 5 20 cubic foot bags of biodegradable peanuts dropped off. UPS picks up here a few times a month, but they are in town every day making deliveries, so it doesn't add any burden to my neighbors. I would say I have a customer come to the shop/house about once or twice a month on average, so not a lot of traffic. There is no sign, and no externally obvious indication that this is a home business. I keep all my finished stock instruments in the house, so customers are actually mostly in here more than in the shop. My lumber needs are maybe 200-300 board feet a year, and it either comes on a truck or I get it locally and bring it home on a trailer behind the car. My main concern is shop noise, but so far I have not heard about any complaints.

Mark Wedel

12-25-2023, 1:32 PM

There are usually 2 main issues why cities don't like home businesses - the amount of noise they may produce, and the amount of visitors and traffic that it results in.

I have a feeling that most cities would turn a pretty blind eye to a home business that only gets 2 visitors a month, but might take a much more active interest in a home business that gets 8 people a day stopping buy - if nothing else, this could seem suspicious in terms of illegal activities (drugs). So while the police may then be happy when you just say it is a home business, the city may not be.

The one I usually here about complaints from is auto mechanics - a well equipped residential garage can do most car repairs, but the extra cars parked along the street, noise from air guns, etc, can annoy neighbors.

So if you can run a home business/shop that isn't obvious, much less likely to run into issues than one which is very obvious (and perhaps against code). It would also seem like there is something of a grey area - if I ran a furniture shop out of my house, and people were coming by and picking things up, that is probably different than if I made furniture that I then sold at craft fairs or other places.

Bryan Hall

12-25-2023, 2:00 PM

The youtube woodworkers have stories and insight on all of this as well. Mark Spagnolo documented moving to Missouri and discussed the problems along the way. William Douglas was actually forced to move out of his own home because of his noise pollution (if you are sanding and milling in your backyard in open air, you're asking for a noise complaint).

Jim Becker

12-25-2023, 7:25 PM

Zoning/Planning in residential zones often permits home businesses, but that usually comes with a prohibition of public traffic (including having employees) and other disruptive activities. The cannot totally forbid it without a major revolt because there are many folks who work from home, have online businesses. In the context of woodworking, assuming there is reasonable attention to noise, etc., a single person shop doing commission work that never or rarely has a visitor would likely not have an issue in most jurisdictions. We've actually had this conversation in the Planning Commission I'm a member of (and may get stuck running this coming year) as well as in the Planning course I recently completed.

That said, the permitted use is not as material to whether or not a "shop building" will provide any additional property value to average buyers. I know when we were shopping for a new property, those that actually had buildings that could be used for that purpose often didn't really call out that use...it's was pretty much, "oh, it has an outbuilding" and was never referred to as a "shop" or anything other than maybe an additional garage for parking.

Curt Harms

12-27-2023, 6:51 AM

Lots of people run commercial shops on their properties, so I know it can be done. I'm always a little curious how they do it on the legal side.. I always assumed they were keeping it on the down low with the assumption that the city / town / unincorporated area, etc doesn't really care. Especially in farm country.

I think most municipalities don't really care unless there are significant tax dollars to be had. If a neighbor bitc...er complains they have to do something if it violates zoning.

Don Corbeil

03-06-2024, 8:34 AM

When my wife and I built our house and shop in Louisiana, we also considered how it would impact the property value. Both Gatte Construction (https://www.homeremodelinglafayettela.com/custom-home-builders), our home builder, and our realtor told us that adding a shop could increase the property value by approximately 80% of its build cost.

Jim Becker

03-06-2024, 9:37 AM

It might...over time...but there is emphasis on the word "time" in that. Geography also matters. Outbuildings have more or less desirability in various areas because of a variety of factors. I can assure you that if I had to sell our property "tomorrow", there's no way I'd get anywhere close to 80% of the $50K I put into the shop building a year ago. In ten years, I likely would.

Justin Rapp

03-06-2024, 10:32 PM

Andrew Seemann

03-07-2024, 12:30 AM

A lot will depend on where you live. I'm at the very edge of suburbia. Around here, once you get out of the housing developments, it seems like you are nobody without at least an outbuilding or two. I figure mine added at least the cost of materials that went into it. Not sure that I would have recovered the cost if I had to pay someone to build it though. Where I was in the city, I didn't recoup the cost of my old shop, a carriage house style building. Having to sell at the bottom of the market in 2011 didn't help.

Jim Becker

03-07-2024, 9:16 AM

Ok - sell me your house so I can have your shop :) I suspect it's got a lot more room than my basement shop! :)
ROFLOL!!! There's a lot available next door if you want to be my neighbor...

Alan Lightstone

03-08-2024, 8:38 AM

Really wondering what mine will add to the property value. I live in an interesting house. The workshop we built is on the ground floor - 2400 sq ft. Climate controlled with plumbing. Could be used as an extra livable floor in the house.

Good old Zillow says that properties in my neighborhood go for $385/sq ft (which seems so insane. We sold our last house, which was larger and gorgeous for about $210/sq ft). Using their math, it should raise the house value by $462K, which is, of course, seems ridiculous.

So I wonder what does building out an area of your existing house that was a garage and turning it into livable space do to your house value.

Jim Becker

03-08-2024, 9:34 AM

Justin Rapp

03-08-2024, 9:42 AM

ROFLOL!!! There's a lot available next door if you want to be my neighbor...

Good idea - except my wife might get a little annoyed at a much longer commute to her job :)

Jim Becker

03-08-2024, 9:50 AM

Good idea - except my wife might get a little annoyed at a much longer commute to her job :)
She's also be annoyed at the cost...it's kinda a sad situation because the folks who bought the property (a local neighbor) did so to rehab the home that was on the land and resell it. Unfortunately, they did not look carefully enough at the condition of the home. (really sad because the guy is an experienced builder but let his desire to help the neighborhood cloud his eyesight) Since it was an "as is" sale, they were then stuck with a building that couldn't be salvaged due to excessive water damage, mold and some significant structural issues. Oh, and a layer of asbestos in the paster. They bought for a low price, but the cost to remediate the asbestos (even doing the labor themselves) was "yuge" and the cost to demolish the structure, haul off the 'stuff' and then regrade the property to presentable was considerable. I helped with the land work and with a little of the pre-demolition. I don't believe anyone would just come off the street and buy the lot for what they have to ask for it to break even, so it will have to be a "build to suit" to ultimately sell it. The guy, while being a great builder, has some major health issues so that's not going to happen anytime soon. Meanwhile...I have a lovely .375 acre lawn next door to my own half acre that I mow and keep in a park-like condition. :) :D

Alan Lightstone

03-08-2024, 12:07 PM

Mark Wedel

03-08-2024, 1:15 PM

At least where I live, the houses are required to have 2 covered parking spots, which in most cases is covered by the garage (no requirement that people park their cars in the garage, just that the space exists). But this means that it normally isn't possible to convert the garage into living space, so garage space is not included in living space for that reason. There are different ways to convert garage into living space (make a carport, or build another garage). And one could do it illegally (without permits), but since most garages are at the front of the property near the street, a bit harder to pull that off.

Michael Burnside

03-08-2024, 2:42 PM

The land will likely be worth more. I bought 2 acres 4 years ago (just before covid) to build a house and detached shop. The shop didn't add much to the appraisal, similar to Alan's comment, but around me to buy 2 acres now will cost you the same as building 5 shops LOL.

Justin Rapp

03-08-2024, 3:27 PM

She's also be annoyed at the cost...it's kinda a sad situation because the folks who bought the property (a local neighbor) did so to rehab the home that was on the land and resell it. Unfortunately, they did not look carefully enough at the condition of the home. (really sad because the guy is an experienced builder but let his desire to help the neighborhood cloud his eyesight) Since it was an "as is" sale, they were then stuck with a building that couldn't be salvaged due to excessive water damage, mold and some significant structural issues. Oh, and a layer of asbestos in the paster. They bought for a low price, but the cost to remediate the asbestos (even doing the labor themselves) was "yuge" and the cost to demolish the structure, haul off the 'stuff' and then regrade the property to presentable was considerable. I helped with the land work and with a little of the pre-demolition. I don't believe anyone would just come off the street and buy the lot for what they have to ask for it to break even, so it will have to be a "build to suit" to ultimately sell it. The guy, while being a great builder, has some major health issues so that's not going to happen anytime soon. Meanwhile...I have a lovely .375 acre lawn next door to my own half acre that I mow and keep in a park-like condition. :) :D

Well it's great to have the extra land next to you until it's bought and built on, and you don't need to even pay the taxes for it. I actually suspect the taxes where you are are about 1/2 what I pay. The actual cost of the land/house would most likely be comparable +/- a bit from where I am in Central NJ. I almost fell on the floor when i saw a few houses sell in our neighborhood. They are closing in on 3 times what I paid for it my house in 2002.

Jim Becker

03-08-2024, 7:30 PM

Well it's great to have the extra land next to you until it's bought and built on, and you don't need to even pay the taxes for it. I actually suspect the taxes where you are are about 1/2 what I pay. The actual cost of the land/house would most likely be comparable +/- a bit from where I am in Central NJ. I almost fell on the floor when i saw a few houses sell in our neighborhood. They are closing in on 3 times what I paid for it my house in 2002.
I seriously doubt that it will be built on for a very long time...and I'm fine with that. :) And if I won the lottery, I'd buy it to insure that, too. My taxes are higher here than at the larger property over in Buckingham, but at about $8K, are likely less than many areas of NJ. Yea, the price of RE is up there. I wish I would have gotten the appreciation we expected at the old property, but alas, it was too unique and took a long time to find a buyer. It is what it is. and there's a nice young family there now.

Justin Rapp

03-09-2024, 8:43 AM

I seriously doubt that it will be built on for a very long time...and I'm fine with that. :) And if I won the lottery, I'd buy it to insure that, too. My taxes are higher here than at the larger property over in Buckingham, but at about $8K, are likely less than many areas of NJ. Yea, the price of RE is up there. I wish I would have gotten the appreciation we expected at the old property, but alas, it was too unique and took a long time to find a buyer. It is what it is. and there's a nice young family there now.

Yup - my property taxes are almost double yours, approaching 15K a year now, even though the median home price sale in Feb 2024 between Middlesex Country, NJ and Bucks County PA is very close (8% difference). So even though it would cost me about the same to buy a house in Buck County, I could save a ton each year on property tax, but sure will have an angry wife that needs to commute an extra 40 minutes. And well, my commute when i need to go up to my office in Bridgewater would be sorta the same. However the cost to move will take a bunch of years to recover with the potential tax savings, and hopefully in 10 to 12 years or so from now we will kiss the garden state goodbye and move somewhere much more cost effective. And one with a nice big shop not in the basement

Maurice Mcmurry

03-09-2024, 9:39 AM

My wife's family home in Boston just hit the market. My old micro shop in the basement did not even get an image or a mention in the listing. Step mom is selling the house with out Wife and BIL's consent or involvement : (

https://www.compass.com/listing/wellington-street-boston-ma-02118/1513145897432470161/

Curt Harms

03-09-2024, 9:39 AM

Jim Becker

03-09-2024, 10:36 AM

Curt, my taxes here at the new place near DelVal at a hair more than half the square footage and a half acre vs 4 acres at the old place in Buckingham is about the same. Things in truly rural areas are a lot different as you note.

Maurice Mcmurry

03-09-2024, 10:58 AM

Taxes at our woodlot in Howard County MO have gone up from $30 to $40 over the last 7 years. I put up a 12 x 40 tractor shed in 2018. The assessor has not added any improvements to our assessment yet. In Columbia MO the tax assessors office follows up on any building permit application within a few days. I warn my clients that the assessors agent will be right on the heels of the building inspector.

Gilbert Vega

03-10-2024, 10:13 PM

When we built our house, we added a 30 x 32 shop with 12ft ceiling and complete brick veneer. We built the shop with a full bathroom and with central air. We installed cable TV, telephone, security system. The entire shop is sheetrocked with premium vinyl flooring and recessed lighting. The shop was built with the intention that it could be converted into a 960 sqft 2 bedroom guest house with a minimum cash outlay. We already have a kitchenette installed with allowances for a full stove.
We figured a shop would not add very much value but a guest room in our neighborhood is very desirable. I believe we're in position to regain a good portion of our investment on the shop.

Tom Bender

03-11-2024, 7:59 PM

When we had our house built in '86 the cost for living space was $50/sq ft. Add a basement $5/sq ft Add a garage 5$/sq ft. Of course the numbers are much higher today but the ratios should be similar.

So if you plan to build a shop, it might be best to build garage quality, then add HVAC and finish it like a shop. If the next owner wants to convert it to living space let him go at it. Living space is pretty much just good for living. But there are people who would see a garage as space to store old cars, boats, ATVs, yard equipment etc. Much easier to find that kind of buyer.

Patty Hann

03-11-2024, 9:48 PM

If it's "just a room", not as much as a nice en-suite would, even thought they are both "living space". But there are still many variables. I don't recall if an attached garage is calculated into the living space or not, but if not, increasing the living space might have some level of immediate uplift in resale value. Whether it covers the expense of conversion or not is a moving target.
In AZ the area of the garage per se is not calculated in the living space.
I'm (oh, so slowly) converting my ~ 450 sqft attached garage into a shop.

I have to upgrade the electrical to the house from 150 to 200A (which is the max the old neighbor infrastructure has available) and then will have 100A subpanel installed in the gara-shop.
A minisplit will also be installed. Garage will be insulated on one wall (outer facing). Block is on the other two [house] walls.
Door will be insulated but I'm debating exactly how I want to do that.
Even when all is said and done, it still may not be considered a "living space" because it has no window.

mike stenson

03-11-2024, 9:53 PM

I wonder if another drop would be possible. I've done that before and know others that have for things like kilns.

Gilbert Vega

03-12-2024, 1:36 AM

In our county, a garage is not included in the square feet. However, if it is designated as a guest cottage, with all the necessary conveniences, it is included in the total square feet.

Jim Becker

03-12-2024, 1:50 PM

I wonder if another drop would be possible. I've done that before and know others that have for things like kilns.
If you mean separate electrical service, that can often be arranged, but may be more expensive long term than upgrading the total service to the property from the typical 200 amp residential service to 400 amps and splitting between the residence and the shop. One bill that way and that's how I did it, both at the old property and our current one. When you go for a second meter/service, depending on the local power provider, you may be hit with a business account and business rate structure or minimally with an extra fee for the extra meter. (Our provider even had an extra fee for an old second meter that was on this house from back in the time when things like laundry and other high power use appliances were separated for billing purposes...once that meter was removed, our bill dropped about $10)

Daniel O'Neill

03-13-2024, 2:19 PM

ROFLOL!!! There's a lot available next door if you want to be my neighbor...

At least he wouldn't complain about the shop noise... :)

Justin Rapp

03-13-2024, 5:19 PM

At least he wouldn't complain about the shop noise... :)

That is very true.

Jim Becker

03-14-2024, 9:38 AM

At least he wouldn't complain about the shop noise... :)
There would be little issue with that fortunately because of both the acoustic thought I put into it and the fact that most of the year, the doors are all closed and the HVAC is running. :) But that might bring the complaint that they CAN'T hear the shop noise. LOL

Justin Rapp

03-14-2024, 11:08 AM

There would be little issue with that fortunately because of both the acoustic thought I put into it and the fact that most of the year, the doors are all closed and the HVAC is running. :) But that might bring the complaint that they CAN'T hear the shop noise. LOL

This is actually pretty true even about my basement shop. My family tells me the machines are not even that loud, even in the house, including the family room and kitchen area which is directly over my shop. So given if I built out a shop in an out-building, it would be very well insulated and noise would be contained.

But indeed, I am not going to be moving anytime soon, and the next move honestly will be out of the area, maybe down to the Carolina's but that is some years away.

robert kempisty

04-07-2024, 9:29 AM

Theories are fun but in reality nothing is known until you actually try and sell it. And taxes seem to only go in one direction. When I built my home it was always intended to become a workshop after I built my real home on the same property. The plan was proposed at a township meeting and the consensus was that the smaller home will be "de-housified" by removing the kitchen after the CO was issued because my 3 acres wasn't allowed to have 2 homes on it at the same time. When I actually sell I'm pretty certain that someone is going to see my shop as a potential guest house or rental opportunity and pay up for that but that's on them. I'd never do that because I value my privacy and peace.

Michael Zerance

04-14-2024, 12:28 PM

Mine is "just" two rooms. But, at least down here, garages don't factor in to "conditioned space", and thus the sq footage that a house is listed at. So in theory, I think, my house grew by 2400 sq ft. In reality, way down the line when we're gone and the kids have to sell the house, who knows.

Alan, I am also in Tampa. I was informed that a detached garage, if it has heating and air conditioning, is combined with the square footage of the house and taxed accordingly. If the garage is just an unconditioned space, then it is not. Is that not accurate?

Bobby Hunt

04-18-2024, 12:54 PM

For those of you who've built a shop, how much value did it add to the property? For instance, if a shop costs $150k, can the property value increase the same? Less? More? I know there's many variables. Thought maybe some of you have been through this, having built a shop then had property value reassessed.

My wife and I are looking to buy a property with a home, and the question is if we should look for one with a shop, or without and build a shop.

Anecdotal but I have sold a house twice with a shop. One I built myself, the other was purchased with the home.

The one I built was 75X40, stick built, on a concrete slab, 4/12 pitch truss roof with shingles, 400 amp single phase service. 480 feet of conditioned air office space with a full bathroom and washer/drier connections. This one was on a separate septic tank from the house. I built it myself in the early 90s. When we sold that property the appraiser added $10K to the appraisal for that shop. It would cost, at that time, around $70K to have it built.

The second one was 60' X 80' with 18 foot ceilings. Metal building on a slab. Had a 960 square foot 1 bedroom apartment - kitchen, laundry, on a mezzanine and corresponding office space on the ground floor. That 1920 feet of space was conditioned. The building had a 800 amp 3 phase service. Had one full bath in the apartment, a half bath in the office and 2-half baths in the shop. Separate water line, separate septic system, private concrete drive 30 feet wide and about 1700 feet long - concrete. Zoning was rural residential which allowed for any commercial practice that the county would license. I had an oil company leasing this shop for $3500 a month (12 month auto renewing lease). We had a buyer going through the process of buying this property which of course required an appraisal. During this process the oil company made us a stupendously stupid offer on the property....nearly 4 times what the buyer had offered. When the buyer's appraisal came back it missed the offer by the buyer by nearly 25%. The buyer was looking at coming up with another 25%. The appraisal had $0 in it for the shop, which would have cost close to a million $ to build on a separate lot at that time (oil boom will do that). The buyer appealed the appraisal, pointing out that the oil company was under contract for at least the next 15 months at $3500 a month (they had missed the auto renewing lease and were content to have done so). No consideration for the fact that the property produced an income of $40K+ a year. Even more galling...$0 for the shop....the appraiser actually said the shop reduced the value of the property. The shop was behind the house, behind a 8 foot tall block wall that screened the house from the shop, in a neighborhood where every house had a similar building and situation....buyers in the area would not consider buying a home without such a shop. We would have honored the buyers contract at the original offer and countered with a reduction of 10% despite having another offer in hand for nearly 4 times what the buyer had offered. They could not come up with the extra money and had to back out. The oil company paid cash for the property and closed it in less than 30 days.

I say all of that to say that in my experience a shop is like a swimming pool....no matter where you're located if your buyer is a typical buyer with a mortgage the shop will add no value and may even reduce the value because it narrows the pool of perspective buyers. That seems counter intuitive, who doesn't want a 4800 square foot income producing property? But believe it or not many buyers would not know what to do with it and the mortgage system is geared toward typical buyers, not those who would love to own said property.

Bobby Hunt

04-18-2024, 1:10 PM

I just heard back from my realtor. He thinks a shop could add to the property maybe 75% of it's build cost.

I wouldn't trust a realtor as far as I could toss them. I know they play a role in pricing but they also make a commission for listing. Depending on how long they have been an agent they may also remember the days when appraisals surprisingly always came back just slightly over the buyer's offer...it was like magic the way this ALWAYS happened. Since the housing bubble bust appraisals are more likely to be low than high....unless the buyer is paying cash or flush with cash the appraisal is all that matters and it will be done by comparing sales of homes in the area which are nothing at all similar to yours outside of having walls, a roof and some dirt.