Sensible Remodels for a Flat Housing Market

Market Watch

With housing values in the tank and any substantial price appreciation in the distant future, sinking money into a remodeling project is a tough sell for many homeowners now.

 

 

In general, you won't recoup as much of a project's cost at resale as you might have several years ago, according to estimates from Remodeling Magazine's Cost vs. Value Report, which weighs the costs of various improvements against their resale value. And while labor costs might be more negotiable in today's market, materials aren't getting any cheaper, said Sal Alfano, editorial director of the magazine.

"Homeowners right now are a little shell-shocked. Houses, up to three years ago, were like a bank account... people were spending money freely on sunrooms and outdoor decks and they were always getting it back," said David Lupberger, home improvement expert for ServiceMagic.com, a Web site that connects homeowners with prescreened home service professionals.

Those who are remodeling are generally opting for fewer frills and less expensive finishes, Alfano said. Instead of building large additions, they're trying to better utilize space they already have. They're seeking energy-efficiency upgrades and low-cost cosmetic improvements that make a home more comfortable and appealing.

Added Alfano: "Instead of saying 'Yes, I want the best of everything,' they're making choices right now. They realize they have to make a decision on materials they want to use for counters and backsplashes and ironing centers. Their budget can't cover the best of everything.

"People are back to tradeoffs, projects are smaller."
 

The little things

Even if resale isn't your top consideration, a check of the Cost vs. Value Report will still give an idea of projects that pack a punch. Home improvements that tend to excel on this list are those that have universal appeal -- and a reasonable price tag.

In terms of cost recouped at resale, seven of the top 10 projects in the 2009-2010 report were exterior-replacement projects, including windows, doors and siding.

A steel exterior door-replacement was the highest-ranked project on the list. It was also the least expensive, Alfano said. For an estimated cost of $1,172, real-estate agents who were surveyed for the report estimated that 128.9% would be recovered at resale. View the Cost vs. Value Report.

"If you have a door that really needs help, you're not spending that much money and you're vastly improving the first impression" of a home, he said.

Painting, replacing older fixtures, and cleaning carpets also are inexpensive ways to spruce up a home without hiring a large home remodeling company -- whether you're planning on selling it soon or not, Lupberger said. "There are a lot of cosmetic things we postpone because of how busy we are," he said.

For budget-conscious homeowners, changing door handles and putting a new finish on interior doors can also make a huge difference, said David Mackowski, of Quality Design and Construction in Raleigh real estate, N.C.

Remember, too, that improvements that make a home more efficient can cut down on utility bills, saving money over the long term. Some products that improve efficiency are eligible for federal tax credits through the end of 2010, and certain appliances qualify for state rebate programs as well.

Foreign Firms Making Charlotte, NC Their Business

Charlotte Observer

Region targeted for airport, location, quality of life and more

The process, part of a positive economic development trend in the Charlotte region, took just a few months.

Executives from German manufacturer Teupen Maschinenbau, looking for a location for a new U.S. headquarters, narrowed their search to a few states. Then they whittled that list to North Carolina, partly for its reputation as a good place to do business and the strength of Charlotte and Raleigh real estate. They visited each. And they chose Charlotte, citing its direct flights to Germany, proximity to major clients and the fact that employees wanted to live there.

"You have everything you need," said Florian Buescher of Teupen USA Inc., which opened off Westinghouse Boulevard in July.

As the economy plummeted, Charlotte-area economic developers have found new hope in foreign-owned firms - which are increasingly considering the U.S. because of the weak dollar - and the Charlotte region for its airport, location, talent pool, lower costs and quality of life.

Many of those companies have brought high-paying jobs in engineering, energy, biotechnology and other emerging fields. And experts say their presence alone could make the region more attractive to similar businesses - meaning the influx of international firms could play a crucial role in reinventing and revitalizing the local economy.

"We're trying to be very aggressive about it," said Kenny McDonald of the Charlotte Regional Partnership, which sends recruiters around the world to drum up interest in the Charlotte area. "It's a very important part of our program, and it probably will become more important in the future."

There are about 850 foreign-owned firms in the region, employing more than 50,000 workers, a recent Charlotte Chamber report found. That's up 13 percent from last year and 34 percent from 2005. Most of those firms have settled in Mecklenburg County. And most have come from Germany, followed by the United Kingdom, Japan, Canada and Switzerland.

"What I think has changed is that global awareness of Charlotte has increased," McDonald said.

To be sure, foreign-owned firms in Mecklenburg County employ just about 8 percent of jobs in the county, based on the chamber's counting, or about 32,800 workers. And some deals come with strings attached, such as hefty incentives packages from state and local officials.

But economic developers hope to see those jobs and that investment in the region grow as the economy recovers.

Notable growth among international businesses began about 20 years ago as foreign firms sought to capitalize on North Carolina's booming textile industry. Soon, the leaders of other firms followed their friends and families to the area.

Interest has grown as the economy slumped, even if anemic consumer demand has halted some expansions and relocations in their tracks, McDonald said. That's because the weak dollar has made it profitable - even mandatory - for foreign companies to establish U.S. operations.

These days, the pool of talented workers - widened as banks and other businesses laid off thousands - is yet another reason to move to the area, said Harry Bowen, a professor of international business at Queens University of Charlotte.

"I look at this as part of a long-term ... change in the economic structure of North Carolina," he said.

Now, the Charlotte area has two or three times as many foreign-owned firms as other similarly sized cities, McDonald said. And that has helped lift some spirits in a region that has lost 62,000 jobs since the recession began.

Some of the region's major job announcements last year came from international firms. They ranged from Toshiba America Nuclear Energy Corp., a Japanese nuclear power plant engineering and construction company, to Biotage LLC, a Swedish company that manufactures instruments used in life science research.

Electrolux - the Swedish giant of kitchen appliances, announced in December it was moving to Charlotte, creating more than 700 jobs. A few weeks later, outdoor power equipment manufacturer Husqvarna - another Swedish company - followed suit, saying it would bring 160 new jobs to the area.

For Teupen, which makes lifts that hoist workers into high spaces in hospitals, churches, stadiums and other buildings, the decision to move to Charlotte capped about two months of research as company officials looked for a location accessible to major dealers and clients.

Buescher, who works in business development and marketing in the Charlotte office, initially liked Raleigh. But once he visited Charlotte, he liked the city, the fact that many Teupen customers had representatives there, and that the company's mechanical engineering focus seemed to fit in better than in the high-tech Triangle area.

Teupen moved about six employees to the U.S. headquarters and will ultimately expand the facility to about 15 or 16, Buescher said.

For Aragon Nutraceuticals, a New Zealand company that distributes nutritional supplements for animals such as race horses and pet glucosamine, the move to Charlotte was influenced by connections. Company officials knew business people in Charlotte who played a part in convincing them to expand into the U.S., said Melda Gilson, business manager at the south Charlotte office.

"It became an easy decision," she said.

Last year, the company opened new manufacturing operations in Rockwell - about 40 miles northeast of Charlotte - to take advantage of the fact that the weak dollar has made it cheaper for foreign-owned companies to do business in the U.S., Gilson said.

That trend of expanding operations into the U.S. will likely continue as foreign companies find it increasingly cost-effective, said Dana Hicks, Charlotte's honorary Canadian consul and managing director of the Perlitz Strategy Group. That organization consults foreign companies thinking about moving to the area.

The airport is a draw, he said, but so is the attitude toward business and international executives.

"People get the impression that they're welcome here," he said.

Economic developers say the future lies in Charlotte's foreign-owned firms. Many of those companies excel in science, energy and health care, which are expected to lead growth in the region and around the country as the economy recovers.

"These companies are important, as they create jobs," said Justin Hunt, the chamber's vice president of economic and European development. "But they also help us by bringing new ideas and new influences."

Maybe Now IS The Time To Start That Business
Story from American Chronicle

Opening a new business requires a dose of bravery in any economy.

The challenges only mount during a downturn. For starters, customers and lenders get stingier with money. Still, this recession, as in past slumps, is sparking a surge in wannabe entrepreneurs striking off on their own.

"Smart and hard-working people lose their jobs, sometimes with severance packages, and no one is hiring," said Thomas Miller, head of N.C. State's Entrepreneurship Initiative, established in July to foster start-up activity. "It's the perfect opportunity to take a shot at that good idea you've always had in the back of your mind."

With the state's jobless rate rising to record levels -- employers cut 41,300 jobs in March, and unemployment shot up to 10.8 percent -- it figures that more workers are considering other options.

Local organizations that help fledgling business owners, including Wake Technical Community College, SCORE and the Council for Entrepreneurial Development, report big increases in demand for classes, seminars and other assistance.

Some are ventures that will always remain one- or two-person operations. Many will fail. But a few could blossom into successful employers that bolster this region's economy.

A year ago, Wake Tech offered one Planning the Entrepreneurial Venture course. Now there are four, with two more starting soon. The $65, 10-week class teaches students how to write a business plan, marketing basics and more.

"Does a business have legs, can you make money at it? That's one of the keys," said Fred Gebarowski, director of entrepreneurship at Wake Tech. "I'm providing a service by keeping some people from starting a business."

It's not just the newly out-of-work that turn out for classes. "Some people are still employed, but want to ramp up their side business, just in case," he said.

Audra George had a full-time job as a legal consultant in late 2007 when she started making speciality cakes, decorated cupcakes and other baked goods out of her North Raleigh home.

She was let go a few weeks ago. Now she's sinking all her time and energy into her business, Audra's Cakes and Creations.

"Of course it's scary," she said. "I always had the security of a job before this. Sometimes things do happen for a reason."

George, 37, makes four to five dozen cupcakes, as well as some rum and amaretto cakes, each week for A Southern Season, the gourmet food store in Chapel Hill. She's in talks with Whole Foods. And she sold her first wedding cake last month. The couple wanted a cheaper option than a traditional cake, so George made a small six-inch cake surrounded by 100 cupcakes.

As she started her venture, learning how to write a business plan was crucial. "I needed to figure out how many cupcakes I had to bake and sell to make a profit," George said.

And she's had to adjust her business model -- she resisted seeking wedding business at first. Now she's hoping word of mouth will attract more. And she's looking ahead to the fourth quarter and the typically busy holiday season. If she can build her client base by then, she expects her business will become profitable. Eventually, she'd like to open a shop.

"In order to move it to the next level, it's going to take a lot of discipline," she added. "Hopefully, things will get better."

Sometimes hard work and a good idea aren't enough, especially during down times. For every recession-era success story -- think Microsoft -- the landscape is littered with failures.

But in some cases, a recession can be a smart time to start a venture because owners learn to make it on a shoestring budget. And choosy customers quickly weed out weak ideas.

"You've got to understand that you're going to be living on the edge financially for some time," said Bob Pickens, recently named director of entrepreneurship at CED, a nonprofit in Research Triangle Park. "It's not for everyone in good times, and it's certainly not in bad times."

Running with an idea

Joe Philipose and Lesley Stracks-Mullem hatched plans for Taste Carolina Gourmet Food Tours last fall. The business partners are forging ahead despite the recession. In March, they started running tours of restaurants, wine bars and other foodie attractions in Durham, Carrboro and Chapel Hill. The Durham tour is gaining fans, with eight or more people each time. Chapel Hill has been a bit slower going.

Tours in Raleigh start Saturday.

"We're doing our best to make money, but we see how tough it is," Philipose said. "We know people don't have a lot of money to spend."

But the owners are passionate about local food, and they know others are, too. The tours ($37 for three hours) offer tastings, a chance to mingle with restaurant owners and chefs, and exposure to new eateries.

Philipose, 36, went to law school but had been doing corporate strategy for drug makers. Last year, he got laid off by Biogen Idec. That hastened his dream of starting a food tour business. He met Stracks-Mullem, 35, who had a similar idea, through a Durham restaurant owner.

"We're definitely taking a long-term view of this," she said. "We've been in business six weeks and we're really pleased with the progress."

They've started marketing the venture, are trying to attract corporate and alumni tours and are considering themed tours -- based on shows at the Progress Energy Center for the Performing Arts, for example.

"It's natural to be nervous," Philipose said. "Do people have less disposable income? Yes. But in times like these, people take time for little luxuries."

Their business is a relatively low-cost endeavor. There are marketing costs, but mostly just lots of hours that Philipose and Stracks-Mullem put in.

And Philipose does have a back-up plan: He recently took a job with Kerr Drug as vice president of strategic planning and business development.

Seed money for nappies

Securing money to start a business becomes a major hurdle in down times. This recession has lenders tightening loan requirements more than ever.

"Banks like a sure thing," said Jerry Lustig, a retired IBMer who is chairman of the Raleigh chapter of SCORE, which taps retirees to counsel small-business owners.

Karissa Binkley realized she needed a few thousand dollars to start a high-quality, eco-friendly diaper service. So she turned to a friendly face for a loan: her grandmother.

Binkley, 30, is a birth doula who helps about two women a month through childbirth. Her family is Dutch and very supportive of natural childbirth.

The Triangle Diaper Co.'s Web site is up and her service officially opens May 4. Binkley, who lives in Cary, sat down with her husband before starting to plan her business selling organic cloth diapers washed in green detergents. He agreed with her assessment that there was an underserved niche, even in a recession. Costs start at $50 a month for 25 diapers a week. A "welcome baby" 12-week package is $285.

Binkley has training in writing business plans, so she built three spreadsheets based on different sales projections.

"The first couple of months are really going to make or break me," she said.

Although she didn't have customers signed up last week, she has consultations scheduled with five mothers, and inquiries from more that are expecting in coming months. She is getting support from several OB-GYNs, the UNC-Midwives practice and others who are giving her information to prospective clients.

"Doors keep opening -- people have been looking for this," Binkley said. "As long as I'm not greedy, I think things will work out. I believe in karma, but you still have to have some business sense, too."

A warm fuzzy

Karen Diebolt didn't feel much pressure when she started her small business because she had a day job as a commercial loan officer. Then in July she was laid off.

"Running your own business is hard, but looking for a job in this economy is really tough," she said. So she turned her complete attention to Softedz, which sells soft, fuzzy creatures for corporation promotions and special events.

Its origins came from Thanksgiving with family in Savannah, Ga. After dinner, Diebolt would help organize crafts. Her sister suggested she take her skill and try making money at it.

She took a Wake Tech class and a series of online seminars. She learned about business plans and online selling. She found a manufacturer in China and secured a supplier.

Now she needs customers.

"It's hard for businesses to spend money on promotions when business is slow," said Diebolt, 54, of Wake Forest.

As she waits for corporate business to perk up, Diebolt is selling some Softedz with a friend's food products from a booth at Magnolia Marketplace in Raleigh. A store in Savannah will start selling them next week. And she's trying to sell them to kids' sports teams as an alternative to trophies.

She's not ready to give up.

"I believe this is a viable idea," Diebolt said. "The timing just turned out to be not as good as it could have been."