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Cost vs Value of Renovating your Home
Sunday, July 24, 2016

Choosing the direction for a home renovation is a complicated decision, as you try to balance the expense of the work with the value the renovation adds to your home. Calculations for the return on your remodel vary widely, depending on the extent and location of the work. Some projects add almost as much value to your home as you spent, while others reap significantly lower returns for the expense. The reason for the discrepancy falls into one of three broad lines of reason:

Your Vision/Future Owners’ Vision

A trap that many homeowners fall into is believing their vision for the home is the only one that matters. You might want to rip out carpeting in the living areas, convert bedrooms into office space, or add a pool to the backyard. While these projects may be a good fit for your family right now, future owners look at those “improvements” as detriments to their vision of the property. Families with children prefer carpeting to hardwood or tiled floors, a reduction in the number of bedrooms limits living space for the family, and pools cost a fortune in upkeep.

If you approach the renovation as an attempt to add value to the home, stick with projects that are useful to a wide variety of home buyers. Bathroom remodels that replace old fixtures and use a neutral combination of floor and wall treatments can yield huge returns. The same is true for converting attic spaces to bedrooms or replacing cabinet tops and doors in a kitchen upgrade.

Short-Term/Long-Term

The top renovations for homeowners are dependent on how long you anticipate owning your home after the work is done. In the short term, projects like kitchen and bathroom work are heavily influenced by the design trends of the time, and what looks new and trendy today will seem dated if you try to sell the home in ten years. On the other hand, projects like a basement renovation or a home addition are investments that stand the test of time. The problem is that the percentage of return on investment for long-term renovations is slightly lower than what you’ll receive for short-term projects; however, this is offset by the stability of the market.

If you plan to sell the home in the next 9-12 months, the best place to spend your renovation dollars is on short-term, high-impact projects. Replacing the fixtures in the kitchen or bathroom will make even an older home seem shiny and new, especially when you follow the hottest trends in design and construction. Fresh paint, siding and roofing also add immediate value, because the new buyer knows those are projects they won’t have to pay for anytime soon.

If you are going to hold the property for several years, your best investments are in projects that add points of distinction between your property and other homes in the neighborhood. Look at adding a connected or covered garage, expanding the size of living areas, or constructing a deck for outdoor gatherings. Each of these renovations adds value to the property by providing a template for the new homeowner to use to bring their own vision for the property to life.

Enjoyment/Investment

Many people go off course in their calculation of renovation value by failing to consider how they will use or enjoy the improvements while they wait for the home to sell. For instance, a woodworker in a cold climate may want to renovate the garage to include insulation and more space to give him extra room for projects. The math says that the return on that renovation is very low, but the enjoyment and use the homeowner gets from the upgraded workspace far outweighs the financial impact. The role enjoyment plays in the renovation calculation is directly related to the length of time that you plan to own the home, with longer residence offering more flexibility in renovation decisions based solely around a single family’s enjoyment.

If the house you’re in right now is one that you want to make into a home, don’t fret about the resale implications of your renovation projects. Provided you don’t eliminate all of the bedrooms in favor of lava pits and all the bathrooms in favor of indoor chicken coops, the financial impact of renovations tailored specifically to your family’s wants and desires will not be enough to outweigh the enjoyment you receive from a house you can call a home.

With so many decisions to make in the early stages of a remodeling project, it’s easy to feel overwhelmed. At Midwest Property Pros, we want to be your guide, sounding board, and partner as you work through the process of transforming your home. Contact us to learn more about our team and to lay the foundation for your project.


 

 

 

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