How much does a shop build add to property value?

[Jim Becker]

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]

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]

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]

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]

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]

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.

[Michael Burnside]

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?

Not sure about Tampa, but a garage is a garage, doesn't matter what you do with it in Colorado. My garage and detached shop are climate controlled...they're still garages and count for exactly 0 sq-ft on my appraisal/taxes. The shop gets a "detached building" moniker, but that's it.

[Mike Rambour]

The real issue is not cost recovery but how much you will enjoy the shop. When I built my shop behind the garage I was told not to because I would never get my money back since the property already had a garage. 14 years later I walk out to the shop and smile. I may have lost money if I ever sell but I sure got my moneys worth

[Robert Hayward]

I may have lost money if I ever sell but I sure got my moneys worth

That has been my line of thinking also. The person that makes every move based on cost of return and money saved will die a wealthy individual. Their heirs will have fun with all the money they did not spend.

I like to find a happy medium and do what will make my life enjoyable now, within reason of course.