By Marcia Jedd
Fireplaces are hot and getter hotter in popularity. Remodelers and new home builders have opportunity to upgrade projects — and margins — with fireplaces.
Approximately 55 percent or more of all new U.S. housing stock built during 2005 had at least one fireplace, with the great majority gas units, notes Steve Melman, economist with the National Association of Home Buildrs. Steve says during the last decade, about five percent of all new homes featured two or more fireplaces.
Home values are enhanced significantly by fireplaces. Steve says a typical home in the Midwest without a fireplace fetches $265,000 versus a comparable home with a fireplace that commands $300,000. In the California market, he says a fireplace adds up to as much as $100,000 in resale on a $700,000 home. "It's not just the fireplace but that whole part of the house is much nicer given the ambiance."
Profit potential
Because most of the work is contracted out to specialists such as the installation crews of fireplace dealers, masons, plumbers, low-voltage electricians (for thermostatically controlled gas models) and others, contractors report margins on fireplaces in the neighborhood of 20 percent to 50 percent.
And fireplaces sell themselves, says Paul Zuch, CR, CGB, president of Capital Improvements design/build in Allen, Texas. Even in the South, upscale customers want the charm of wood-burning fireplaces. Zuch achieves that with pre-engineered block-assembly fireplaces by manufacturers Isokern and Rumford.
"In a traditional wood-burning fireplace, a mason could take three to four days to build a fireplace," Zuch says. "With the block component fireplaces, a crew can install a full masonry fireplace in four hours." Many of his customers opt to add a gas line to light the wood, or later add a gas log set.
A typical model by Isokern, complete with clay chimney caps, costs Zuch $3,000, plus another $1,200 to install. "We mark it up the same as any other line item." So on the Isokern model, Zuch charges the customer around $6,300 on the $4,200 job. Currently, one project by Zuch in a million-dollar remodeling project on a Dallas home features five fireplaces: office, library, master bedroom, family room and separate game room.
In updating older homes, John Murphy, president of Murphy Bros. Designers and Remodelers in Minneapolis, often gives facelifts to wood-burning and gas fireplaces. In one remodel of a traditional masonry fireplace, Murphy's crew installed slate tiles and replaced the hearth and mantel over the 1960s-era brick fireplace, bringing the slate to the ceiling.
The job, which was part of a renovation to a family and dining room project, included a new poured-concrete floating hearth, four inches above the floor, which made for a modern look that showcases the wood-burning fireplace. The fireplace portion added around $9,000 cost to the entire project and included overhead for project managers, carpenters and the like. Murphy estimates his profit margin on the fireplace remodel at 28 percent above the total cost.
Other facelift jobs by Murphy Bros. range from simple cosmetic changes, such as painting brick and replacing a mantel, to changing out gas fireboxes in upgrading to higher-tech gas fireplaces, complete with more elaborate stone or ceramic surrounds and fancier hearths. "We might charge anywhere from $2,500 to $9,000 for the fairly basic facelift projects, depending on the cost of materials and the labor involved," Murphy says, noting this doesn't include more elaborate projects. Basic new fireplaces, complete with installation, typically start at $7,000 but may go far higher.
"We try to maintain the same margin as the rest of our work," Murphy says.
Selling fireplaces
Murphy and Zuch suggest considering the following when upgrading a project to include a fireplace or a facelift for one:
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