So, you're thinking of remodeling or adding onto your home. That could be one of the wisest things you could do in today's housing market. But you may be asking yourself what projects are the most cost effective. The answer can be more complicated than you might think.
Some things to consider:
What is the purpose of the improvements you are contemplating?
How long do you plan to live in the home after the improvements are made?
What 162Ewill give you the biggest return on your investment?
Let's look at the first two:
The Purpose of the Improvements and Time-frame for Living in the Home. Is your purpose to make the home easier to sell, or have you simply outgrown the space and need more room? Perhaps it is just time to get rid of the Brady Bunch carpet and other groovy designs of the 70's.
If you just want to sell the home and get top dollar for it, some improvements are a great investment; especially in today's housing market. Anything you can do to make your home stand out is a good thing. In some cases it may not bring any extra money to the offer, however, it will shorten the time on the market. Pay close attention to paint condition and color-both inside and out. Bring them into a more neutral color scheme that won't turn off a potential buyer. Clean up the yard and paint the trim of the exterior doors to give a good first impression. These are inexpensive and easy tasks that add curb appeal and make you feel better about living there. Is the carpet worn or out dated? If so replace it.
These improvements are also the first place to start if you just need to bring the home up-to-date so that your friends and neighbors don't have a flash back when they come over for the big game or the kid's birthday party.
If you need some extra room because you have out grown your current home, the best place to start, from an out-of-pocket expense perspective, is in the basement. If you have an unfinished basement you can finish it off with a very reasonable investment. However, if you have plans of selling soon, do not expect to get top dollar for your investment. Homeowners love to finish basements to add resale value to their homes. The sad truth of the matter is that the average return on investment for finishing your basement is about 70%. So if you need the space for an extra bedroom or your family room-- go for it, but don't do it thinking you are going to get a huge return if you sell the home shortly after.
If you are looking to get a return out of your improvements you need to consider which improvement will give you the greatest return. There is no cut and dried answer on this, however, there are some guidelines you need to understand.
I love watching TV shows where investors come in and buy a fixer upper and start throwing numbers around like every improvement made to a home will be worth twice the amount they put into the home. Not true! For example, your home may need new siding to keep it from looking like one of those wrecks that investors want to buy to fix up. You should replace the siding to keep from losing value, but you will only get about 80% return on the investment. You also need to consider how much someone would negotiate you down if you did not replace it. You will most often lose more on the sale price by not replacing or fixing items like siding, carpet and paint.
Now back to what improvements get you the best return for your money. The number one place to start is in the kitchen. As a real estate agent, I saw it time and time again. If a kitchen was modern and up-to-date the asking price was much higher than if it was worn out and dated. On average, statistics show that you will get about 90% of your money back on a kitchen remodel. However, there are things that you can do to either increase that return or to decrease it. For example, if you are using tile, you can find tile from a dollar a square foot up to nine dollars a square foot, or even more. Which one you want to use is based upon the home, neighborhood and amount of time you plan to live in the home. Another way to dramatically update a kitchen is by installing custom cabinets, (an investment that has no limits on what you can spend), or you can go with a good quality modular system that can look custom.
The second best place to add value to a home is in the bathrooms. Updating the bathrooms gives great return on investment. Updating the bathroom gives you a return just short of a kitchen remodel. Again, you can go out of control with fixtures, tile and upgrades, or you can be modest in your choices and still transform an outdated bathroom into a room to be proud of.
Always consider the price, size and neighborhood in picking materials. You don't want a million dollar kitchen in a $200,000 home.
The area I have not covered and I will save for my next article is additions. Additions can also be a great return on your investment; however, there are some pit falls you need to avoid.
Mark Weisenburger has been a real estate agent were he sold new construction as well as existing homes. He has also been a mortgage officer. Mark is currently in construction sales helping families' dreams come true by helping them with remodels, additions and/or building their dream home. For more information you can visit his website http://hirethemonsters.com
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