Home rehab -- bank telling me to assume $0.30 value increase per $1 spent

[Account Closed]

I'm looking to finance a renovation of my primary residence and one of my lenders is telling me that if I spend $150,000 on a renovation, I can expect it to add $50,000 or so of value to my home. That seems too conservative to me. I understand I may not get a dollar for dollar value increase (spending $30,000 on a new garage isn't going to increase our value by $30,000), but $0.30 on the dollar seems quite low to me. I'm trying to finance the entire project and I'm current sitting at 70% LTV on my current mortgage. I can get funds up to 80% of ARV, so the appraisal is crucial to my ability to get the necessary funds. Assume home is in a very strong location and assume we would do a high quality renovation and use an excellent architect and builder who's work I know and trust. Is this $0.30 per dollar spent a common metric?

[Jon Holdman]

It depends on what you're trying to do.   If you have a nice, functional kitchen and replace it will a similar but more up-to-date one, the return will be low.  OTOH, if you replace a completely wrecked kitchen with a nice, modern one, your returns can be very high.  That's how fix and flippers make money.   Most home improvements on a residence return a relatively low percentage.

Here's one summary of returns:

http://www.remodeling.hw.net/cost-vs-value/2014/