Will Your Home Renovations Pay Off?
For most of us, our home is our largest single asset.
From a financial perspective making home renovations to keep your home in good condition is a smart move. Routine maintenance and repairs to keep your home up reduce the risk of larger more costly repairs that could occur due to neglect. They make your life safer and more comfortable while you live in your home and those repairs keep your home ready to sell if you need to make that decision at some point.
Some maintenance and improvement items may even be tax deductible. Be sure to check with your tax preparer before spending on home repairs.
When it comes to home renovations that go beyond routine maintenance it’s important to weigh the cost and possible return before you begin. Not all home renovations are the same. Some could increase the value of your house and really help you sell your house when the time comes. Others not so much….
Here are some important considerations to make before you begin to renovate.
PROJECTS THAT PAY
Not all remodeling projects are created equal. “People buying a house look first at kitchens and baths,” says Kermit Baker, director of the remodeling futures program at the Joint Center for Housing Studies at Harvard University. So while these rooms can be the most costly to redo, they’re more likely to pay for themselves. Adding rooms, such as a family room or master suite, also tends to fare well at resale time: Bigger homes command higher prices.
At the other end of the spectrum, swimming pools hardly ever return their cost, because a lot of buyers aren’t willing to shell out more for a house just to acquire what they consider a maintenance bother. Home offices tend to be low-return for the same reason: Only a handful of buyers will want a room designed for working. (Think of it this way: How high a premium would you be willing to pay for a convertible if you were never going to put the top down?)
And just because a project is expensive doesn’t mean it will pay back more. Often, minor improvements can yield major dividends. According to Remodeling magazine’s annual analysis of cost versus value, a kitchen “face-lift” — painting, refinishing surfaces, and upgrading appliances — will return more than a full redesign. The key to spending less is spending it wisely. “If you take $20,000 and spend it judiciously on a kitchen, you can make it look a million times better,” says Remodeling senior editor Jim Cory, who supervises the survey. “The design and product selection are key.”
The Neighborhood Matters
Before Kevin and Julianne Warren spent $42,000 to remodel the kitchen in their nicely detailed 1950s ranch house, the home was probably worth about $150,000. But their location, the Forest Hills section of Grand Rapids, Michigan, gave them confidence that the improvements were a smart bet. “This is a high-end neighborhood for schools. Everyone tries to get into this area,” Kevin says.
Even better, the Warrens’ home is surrounded by properties worth $200,000 or so. That means they haven’t priced themselves out of the local market, a very important consideration with any remodeling project. “Are you going to do work that makes your house worth $300,000 when it’s sitting in a $100,000 neighborhood?” asks Israel Ramos, a real estate agent in Phoenix, Arizona.
“Don’t exceed the ceiling for the neighborhood, or you won’t get your money back.” Just as your home’s cost should be in line with your neighborhood, your improvements should be in line with the value of your home. In Seattle, real estate agent Kay Rigley recently discovered that a former client spent $90,000 on remodeling two bathrooms, complete with heated floors and Italian tile. “I said, ‘I wish you had talked to me first,'” she says. Between what they paid for the property and other improvements, the owners spent more than half a million dollars on a home that Rigley estimates is worth $450,000 at most.
– via www.thisoldhouse.com
Which Projects Pay Most?
We all know that home buyers love beautiful kitchens and bathrooms. Remodeling a kitchen or bathroom is very expensive. Will you get the return you want by spending all that money?
Here are a couple home renovations that bring a good return for your investment and you may spend less than you think.
1. Replacing Your Front Door
Your faithful front door works tirelessly — day in and day out — to usher in you and your guests, and to seal your house up tight. But when Old Faithful gets tired and worn out, don’t hesitate to call in a replacement. Year in and year out, replacing your old front door with a new steel door is a project that kicks up curb appeal and yields the best payback.
“It gives you the best bang for your buck in terms of transforming the look and feel of your home,” says Brandon Erdmann, president of the remodeling firm HomeSealed Exteriors in Milwaukee. “Plus, old exterior doors can be a huge source of energy loss. So you’re improving the look of your house, improving energy efficiency, and you’re able to do it without breaking the bank.”
It’s also a relatively low-cost project. According to the “Remodeling Impact Report,” a new steel front entry door has a national median cost of $2,000 installed, and can recover 75% of that cost at resale.
2. New Siding
Old, worn siding, along with generally sad curb appeal, can contribute to a loss of up to 10% of your home’s value, according to some appraisers. New siding, on the other hand, practically screams “my owner takes care of me.”
What to choose? Both vinyl and fiber-cement siding are good replacement options.
Vinyl siding is low-cost, durable, and easy to install, and it hits all the right notes when it comes to getting a return on your home improvement dollars. Best of all: It’s a low-maintenance feature that frees up your time.
Today’s vinyl siding includes fade-resistant finishes and transferrable lifetime warranties that are much better than the 10-year guarantees of just two decades ago. There’s good payback, too. According to the “2015 Remodeling Impact Report,” the $12,000 national median cost of a vinyl siding replacement job returns a solid 83% if you should decide to sell your home.
Fiber-cement siding also shows a strong payback of 79% in the “Remodeling Impact Report.” Although its national median cost of $19,100 makes it the pricier option, it has one thing vinyl still lacks — the perception of quality.
And quality matters. In a survey from the National Association of Home Builders (NAHB), “quality” was the one of the most important traits that home buyers focused on when shopping for a house. A final word: 100% of homeowners responding to the “Report” said they were happy or satisfied with the result of their fiber-cement siding replacement project.
– via Houselogic
Are you considering remodeling your home as an investment?