Cost of renovation vs. final house

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07/30/2017 - 10:06

Cost of renovation vs. final house value - any recommendations? I am looking to possibly restore a 19th century house in a Piemontese hamlet which was used to make wine. It is tiny and on 4 floors (cellar, ground floor, first floor and attic) - only 96 m2 if you include one room in the attic. It is basically a ruin and just about everything has to be redone. The walls seem okay but the roof, flooring/ceilings, electricity, plus installation of a kitchen/bathroom(s), etc. all have to be done.I got a guestimation from a local geometra that the estate agent recommended. But his quote with the cost of the house and fees for permits, notary, agent, etc looks like the house might cost more to renovate than what it would be worth in the end. It has character which is good but there are limits. It makes little sense to spend €180,000 on a house that might only be worth €140,000 (or less??) once it is finished.Does anyone have any recommendations on what I could do to find the potential value AFTER renovation work to see if it is a project worth continuing? I have discussed this with the realtor, but he doesn't seem like he wants to talk about it much ("It is so hard to say, it all depends on what you do, etc. etc."). Big surprise there. I understand what he is coming from but at the same time, a 96m2 in a hamlet outside of Dogliani, Piemonte will not sell for €500,000, even if there were a gold toilet. The geometra gave me a figure (depending on actual work), so I presume someone else could give me another ball park figure when finished, no? I would be looking to make it a second home but would probably rent it out for short holiday lets more than actually live in it.Many thanks.

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I think you really need to consider why you want to buy the place - what is making the decision - Heart [bad] or head [better]?You need to remember that 'initial quotes' are invariably lower than the final cost for works.Supervising the work is a nightmare if you are not there - you rely on others 'doing the right thing'.If you are worried about the total cost, and your answer is to try and find as higher sale price as possible, I think you are 'on a loser', as you can always find somebody who will give the answer you want, at a cost. My suggestion would be to look at what the the sum you intend to spend could buy in the vicinity, in terms of a place ready to move in to.  Is it really worth the hassle of months/years of spending on a 'money pit'?

 I would be buying the house for my personal use, however, I would also like to rent it out for holiday lets on places like Airbnb. If so, I would like to make some money when I am not using it however I do not intend to sell it straight away. Maybe at some point down the line. Nonetheless I don't want to lose out badly because that makes no sense even if it is for personal use.

Holiday lets - who is going to clean the place [before and after let] and supply clean linen etc?Holiday Home - will you end up spending all your time tidying up the garden at the start of each holiday? - I know somebody who bought a holiday home - takes her at least 3 days to get the garden tidy, even before she can start her holiday, and another 1 or 2 days to redo it before she leaves

Hi I live in Piemonte in Asti province, when we searched for our house we did look in that area. We discounted it as it tended to be a little isolated, houses where also cheaper than our area but the farther you go from the main towns the more difficulty you will have with resale and also less popular for holiday lets. Although that was 6 years ago and things may have changed since. Mind you the change is that there is fierce competition out there everybody is renting houses on air b and b.the estate agents will tell you there is a shortage in fact they will say what ever you want to hear.I completely agree with everything the others have said many of our friends are sitting on negative equity after spending too much on the refurbishment.  I would really think hard as to why you are buying the property. I also have friends who spend all their holidays grafting in their holiday homes. Regarding the cost of renovating around here they work at 1000 euros a square metre. Obviously you can do it a lot cheaper but you have to be prepared to do as we have done live on site , labour , project manage etc etc. I have a blog site but have actually just started a new facebook site " Casa del Roseto. My italian dream " It is telling the story of the renovation through pictures. It may be some help to you and if you have any questions please ask. By the way our house was a complete wreck there is nothing we have not touched but it is over 300 square metres on the ground floor we have 3 floors so I will leave it with you to estimate the area we have been working with.I guess we are a little crazy. Hope this helps with your dilemma. Julia 

Thanks, Julia. Very helpful post. Asti is too far for me, though I agree that it is a very pretty area. I work in the wine business, so I need to be close to the Barolo towns - Monforte d'Alba, Barolo, La Morra, etc. I could look in those towns - and I still might - but it is a little more expensive there. But the biggest thing is that I need a house with character, that has a story and I have not seen anything available in those areas that tick that box.The little house I am looking at is not very isolated at all in this sense. Though it is in a small hamlet with only about 6-7 other houses, it is only a 3 minute drive from Dogliani itself, the area's 2nd most active market town after Alba. There are numerous restaurants, a cinema and a busy market twice a week.It is close to highways for people to go to the sea or Torino (both about 1 hour drive). The Barolo towns are about 12-22 minutes drive away. One of my favourite Barolo estates, which is also quite famous is about a 3 minute drive away. So, I have done a bit of research into the location. Somewhere like Asti is way too far from the top Nebbiolo sites which is why wine people come to Piemonte. And this would be my client base - mostly foreign I imagine. :)The house has a lot of character (it used to be used for winemaking and has a nice albeit slightly ruined cellar) and if I were to take the project on, I would renovate to keep this character and market it as an old winemaking house. At the moment, I have not seen anything like it, which is why I am drawn to it. Vaulted cellars are not so easy to find in tiny houses it seems in Piemonte, only the much bigger ones - but please do correct me if I am mistaken.Because it is small, it would still be affordable for couples to rent though would sleep 6 in case people wanted to come with their friends. It also has a small garden with some hazelnut and fig trees which is a nice touch. Saying that, I have a feeling it will cost more to renovate than it will be worth in the end. This does bother me and as a result. So, I need to do more research and lots of thinking! Out of curiosity, do you know how much a garage might add to the value? There is a ruined "portico" out in the back which can be (must be) converted back into a storage space and/or garage. It is 2 levels which will add to the overall space, but not living space. This is indeed another expense which concerns me. It is possible that a garage would not add that much to the overall value but would obviously add quite a bit to the cost of refurbishment. I do think foreigners would appreciate a garage that locks much more than Italians as well. So, that is another consideration.Thanks again for your message!Cheers.

Hi you have certainly done some research.Firstly by Asti I actually meant the province, it is a huge area which covers as close to Govone only about 10 minutes from the centre of Alba. We are close to the town of Nizza monferrato famous for its production of Barbera. This area was given Unesco status two years ago and it is amazing how the tourists are flocking in to experience the wines etc.especially the Swiss and Northern europeans. No doubt with your knowledge of wine you will be aware that Barbera is growing in importance and popularity and in fact we live close to some of the best cantinas in the area. They took various medals at the countries most prestigious wine festival in Asti "The Douja d'Or "which of course would be on your list of must do for any visitors.Now re the house the area South East of Alba was originally completely vineyard so the old houses big and small have lots of character. Prior to buying our house 6 years ago we saw numerous with all these things in various states of repair. You have no doubt seen the pictures on my blog site www.juliasitaliangarden.com  or my Facebook site Casa del Roseto.our house is big and oozing with character even the old vasche in the cantina where supposedly used by the partigiani to hide from the enemy during the war. I don't doubt this, they were built like war shelters even a nuclear bomb would not have flattened them it took weeks of road drilling to clear it out. Our cantina is huge we had a party last week seating 25 easily but our friend has bought a little end terrace house in the village. It sits high above the roof tops looking towards the peaks of the Alps it has rustic ceilings and a beautiful perfectly formed cantina for this little gem he paid in the region of 20,000 and his renovation cost is predicted to be around 70,000 it needed a new roof. It really depends on what he is willing to spend on a holiday home. The garage I would feel as long as there is some shade for the cars I really can't imagine any possible client choosing your house over one in another area due to a garage. A swimming pool that is another story.Hope all this helps. By the way Dogliani sound a good prospect you are just going to have to bring the purchase price down and be prepared to work yourself on the restoration you can really bring your costs down to budget. Be prepared to negotiate hope this helps by the way where are you from? Julia   

Hi again, Julia. I did look on both sites and your house is indeed lovely. It is so picturesque being right in the vines and on a hill! Your friend's house sounds interesting as well. And thanks for sharing cost price + renonation costs. The house I am looking at is being listed in the upper 20s but I would hope that I could get it for a bit less. The renovation costs are estimated at €100,000. There would be 96 m2 of livable space but I also want to redo other areas like the cellar which are not considered livable space. The price sounds about right if it costs €800-1000 per m2 to redo a house.The estimate also supposedly includes the installation of a septic tank and an underground GPL tank. I need to get more than one estimate though to compare because I am aware that people tend to be conservative and then say "whoops, it costs more than I thought" so I would need some sort of contract so this doesn't happen. Do you know how much GPL tank installations cost? I know in the US, gas companies will often do them for a song as long as you take out a contract on buying gas from them.If I do buy something there, it would be great to meet you and learn more about your area. It is true that wine is all over most of Piemonte - at least down there. Northern Piemonte is much more limited in this sense but the middle and southern areas make a lot of wine. I am actually American and live in Switzerland. I moved to Switzerland after living in London for 10 years. I cannot afford an outhouse in Switzerland, so I thought it would be nice to get a house in an area that I love and is more affordable. I am also looking at France but Piemonte is closer to where I live at the moment, and is only an hour's drive to the beach. I love that. Where I am looking in France, it is beautiful but land-locked and further away from the sea. But I speak better French than Italian and am more familiar with French regulations.Thanks again!

Hi once again The gpl question, I believe the installation is free  they make there money on the gas purchase so shop around. We are just about to go down this road ourselves however not for our living accomadation. We fitted a large efel wood burning stove, which provided cooking facilities on top. It heats well over 100 cubic metres downstairs and the chimney goes through our upstairs bedroom so we get a heated brick  wall. As I am not keen on heat in the bedroom it is completely adequate.  The heat does actually rise through the cotto tiles on the ceilings  so we also have heated floors upstairs.  The efel is also quite a handsome beast in our living room it is so cosy on winter evenings. In fact we were so impressed that we bought another secondhand for our sitting room in an other part of the house. It is slightly smaller band enamelled a beautiful green. You will see pictures of this in due course on my site.We are going to use Gpl just for secondary heating if we have guests, or if the temps get sub zero. For hot water we are fitting a solar panel system and again secondary electric boilers and gpl.We have considered this greatly and this is the best method and cheapest for ourselves. By all means if you are in our area we are happy to meet.We do have a friend who is an architect he lives in Milan and has another house close to here. He is Irish and completely understands the dilemmas that we all have with the language barriers etc. It may be worth you getting a second opinion from him before you start on this adventure. .He is certainly very honest.Hope this is some help

In reply to by julia G.

Wow. You have really done some analysis into the heating/cooking aspect. It would be great to learn more from you if indeed it does look like I will go forward with the house. I'd love to consider ideas like solar panels and whatever else to help improve the energy rating. The estate agent who is representing the house told me that it is one of the more important aspects now in terms of successful house sales and creating an attractive house for sellers. Again, I am not interested in flipping it but it is good to consider later down the road. Plus, if I do let it out, I would love to keep the utility bills to a minimum.One quick question which I forgot to ask is that the geometra quoted me €10,000-12,000 for the more technical side to permits. This would include doing the blueprints to the house, doing an energy analysis, and other things. I can actually copy and paste it here in Italian:e spese tecniche per ottenere il Permesso di Costruire sono di circa 10.000/12.000 euro comprensive di:-pratica edilizia, tavole grafiche, computo metrico, autorizzazione paesaggistica, relazione sugli impianti, autorizzazione degli scarichi reflui, relazione geotecnica, pratica strutturale per i solai e per il tetto, relazione tecnica per la linea vita sul tetto, attestazione energetica finale, agibilità e tutta la documentazione integrativa necessaria per l’ ottenimento del Permesso, comprensiva la direzione dei lavori architettonici e strutturali in cantiere;-Pratica sicurezza cantiere, compresa la redazione del Piano di Sicurezza e Coordinamento in fase di progettazione, la presentazione della notifica preliminare e il coordinamento in fase di esecuzione lavori con relativi sopralluoghi.- Redazione dell’ accatastamento finale.Does this sound about right? It is extraordinary that all of this has to be paid even before anything is renovated. It is in addition to the €100,000 quote for the renovation itself.Regarding your Irish architect friend who lives in Milan and Piemonte, I would be delighted to talk to him too. I have never bought a house before, let alone a house in tatters, in a foreign country where my language skills are limited. So, I need to do as much research as possible. If it is okay, I can contact you through your Facebook page or blog so we can continue talking that way.Thanks so much for your help! Robin

Going back to your original post - if you have to do a complete renovation (everything except the walls) then I think €1000/sm will not be enough. You'll find purpose made joinery particularly expensive. Hopefully in your area you won't have to deal with additional anti-earthquake measures as well.

Yes, I have serious concerns that it will be more money than €1000. If I get an estimate before the work that seems fair, is there any way to be sure that a builder won't say that I need to pay for more in the end? That would be a disaster. 

I have been lucky with the builders I have used but I know others haven't. You need to get a detailed quote with quantities and detailed descriptions (a computo metrico) from each trade and show them to the geometra you are using to ensure everything is covered. In particular make sure the general builder has allowed all the work to help the other trades (assitenza muraria); for example making holes in walls for pipework and cables. Although it is riskier using separate trades it will be cheaper and you will have more control over each trade.Golden rule- then don't change anything. I'd allow a further 10% for contingencies. Being a major renovation the IVA should be only 10% rather than 22%