Adding value to my house?

[800who]

I just recently bought a new construction house for $285k 30 year conv with 3% down, I have a lot of plans in the making for this house and with that I was thinking that as I put the plans into reality the value of the home will increase. These plans consist of a paved driveway, landscaping, garage, etc... When I was planning on purchasing the house I was contemplating plans to get my LTV below 78% to rid of PMI, but with these upgrade plans I was thinking I would be increasing the value of the house, would it be better to focus on increasing the value of the house and eventually getting another appraisal in hopes of reaching the threshold of LTV? Do I have the right mindset here? On a side note, someone cautioned me with garage building intentions as he claimed it hardly helps with increasing value of a home, thoughts on that?

Thanks

[dragontears]

Well to go from a 97% LTV to 78%LTV on a 285k property your improvements need to increase the value of the property by 69k.

As for the garage, last house I bought didn't have a garage and on the appraisal it said that a garage didn't affect the value in the area. This could depend on the state/county/city/neighborhood you are in.

[800who]

@dragontears Yes, your math is true, however this would be over the next several years, so implied factoring in payments made towards principle as well. 

[iced]

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@800who wrote:

I just recently bought a new construction house for $285k 30 year conv with 3% down, I have a lot of plans in the making for this house and with that I was thinking that as I put the plans into reality the value of the home will increase. These plans consist of a paved driveway, landscaping, garage, etc... When I was planning on purchasing the house I was contemplating plans to get my LTV below 78% to rid of PMI, but with these upgrade plans I was thinking I would be increasing the value of the house, would it be better to focus on increasing the value of the house and eventually getting another appraisal in hopes of reaching the threshold of LTV? Do I have the right mindset here? On a side note, someone cautioned me with garage building intentions as he claimed it hardly helps with increasing value of a home, thoughts on that?

Thanks

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Time and location are the two best ways to build reliable equity in a home, and neither of those are things you can buy after the fact. Everything else is going to be a YMMV situation, depending on location and buyer demographics.

If the goal is to put money into the house to grow the equity at a profit, a la what half of the HGTV shows want you to believe you can easily do, you're probably ultimately better off putting that money into the mortgage. If you are going to live there a while and want those improvements to make you happier, that's a different (and personal) decision.

Around here, garages DO add value to a home, but not so much because they're a garage but rather because they're off-street parking. That is, a covered spot or even a deeded parking spot in an alley would add similar value. Though to be fair, the places with attached garages start around $2-3 million, so there's not exactly a huge inventory of them to begin with.

[disdreamin]

I don't think the idea of a garage adding value is a guarantee unless you're in an urban area where any dedicated off street parking demands a premium. I'd consult with a realtor and ask whether outbuildings truly add value in the area you are in.

As far as driveway and landscaping, they are necessary and might add to curb appeal (and thus increase a homes desirability) if done well, but I know as a buyer I'm not typically adding $$,$$$ due to them. Hardscaping might be a different story depending on how well it's done and what purpose it serves, but I have friends who did nearly six figures of hardscape in their back yard and, while it's nice, it certainly didn't add that to their homes appraised value.

Frankly it's one of the big reasons new construction looks attractive price-wise - there is a hidden cost in needing to do things like landscaping, paving, hardscaping, window treatments, gutters, deck/patio, etc. that already exist in established homes. I'd estimate we spent upwards of $20k on the list I mentioned after we closed on our new construction, and we did the landscaping, deck, etc. ourselves. It didn't impact the appraisal on our home in any significant way (I did a refi just a few years into our original mortgage...and another a few years later).

Bottom line, I think the most reliable way to increase LTV is paying down the loan, and that's where I'd invest my money.

[800who]

@disdreamin This was a very helpful and well explained answer, thanks!