Just the other day I drove past the home of a client who hired me to do a feasibility study for a small addition project they wanted to do on the home they had bought not 2 years earlier. The addition itself really wasn’t an issue per se, but it was a rather old home on a challenging lot with an 8ft high retaining wall fronting the property and a single car, subterranean garage that exited through this retaining wall nearly at the front property line at the street.
Due to City parking ordinances, virtually any addition to this home would require that they provide two covered (i.e. garage or carport) off street parking spaces. This would prove to be very expensive given the retaining wall at the front (street side) of the property. This alone would nearly double the cost of the entire project. There was a potential for seeking a variance and not provide the added parking due to the very unusual nature of the lot, but this would cost a significant amount of time and money with no promise of being able to do the project without providing the additional covered parking.
They really did love the house itself, and the location, but they needed something larger to accommodate their growing family. So, in the end, the decided to put it up for sale. I can’t help but think had they consulted an architect prior to, or during, the purchase, they might have considered a different property and saved themselves a lot of time and money in the long run. Who wants to move out of a house they love after just 2 years?
I have had similar experiences with clients that purchased properties for business needs. Many time real estate agents will try and provide this kind of research for their clients as part of the escrow process, but (as in the case of this particular business property) they are not specifically trained or educated, or may not have a lot of experience with city and county zoning ordinances and don’t always know what to look for that may make a property not the right fit for a particular customer. In this case the agent even got a letter from the planning department saying the intended use of the building being purchased would be allowed. After escrow closed and they hired me, it turned out due to zoning ordinances that they would not be able to achieve the necessary onsite parking requirements for the particular kind of business that they has proposed and they were forced to sell the property.
So, when purchasing a property for any use with any intention of altering or further developing it in the future, I strongly recommend hiring a professional that is well versed in city and county development ordinances and laws. For a few hundred dollars, you can save yourself countless thousands and an enormous amount of time and strife in the long run.
I do a lot of small scale residential remodels and additions and this question comes up very frequently. The simple answer is, no. In fact this has almost never been the case in modern history. Just recently the “Cost vs. Value” has started to make some forward progress since the beginning of The Great Recession but even now currently stands at 60.6%. That is, that percentage of the money you put into your house will be reflected immediately in its resale value.
So, I always tell my clients that this type of investment should be considered a long term one, and not short term “flip it” one. And, in my opinion, “flipping” should be left to professionals with a lot of experience. Even then, it can be very risky. Your main investment should be thought of in terms of the added daily quality of life it will bring. This cannot be easily measured.