How much does a shop build add to property value?

[Mark Wedel]

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]

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]

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]

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]

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]

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]

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]

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]

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]

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]

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]

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]

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]

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]

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.