Beyond the typical small projects many homeowners ponder, there are larger projects to consider as well. Homeowners also must decide which make sense for the best return on financial investment. The common home improvements, such as updating a kitchen or bathroom may result in a reasonable increase, but other projects can have a much greater impact on your property’s market value. Try googling ‘best home improvements’ or ’how to increase home value’ – you will have endless results at your fingertips instantaneously. The real question is how do you process and apply that data to your unique situation? What makes sense for your home? That answer is dependent on YOU.
My experience assisting hundreds of homeowners over the past three decades has given me a unique perspective. Time and time again, an obvious solution fails to address long term needs and is overtaken by the approach that tackles underlying priorities.
- First, I believe it’s helpful to list your priorities and categorize all the potential remodeling projects. Define them as “must haves” or “like to haves” for you and your family’s needs – this is critical.
- Second, determine which projects are home ownership obligations (routine maintenance and necessary updates) vs. home transformation opportunities to optimize functionality (interior layout modifications, expansion, and building out unfinished space). Obligation projects such as replacing a roof, updating a 40 year old bathroom, or saying goodbye to that 70’s era kitchen, should help you sell your home, but may not move the needle much to increase property value.
As described above, opportunities to transform your home could result in a more significant increase. An HGTV feature recently reported that the addition of attic bedrooms, family rooms, and sunrooms returned anywhere from 70 to more than 80 percent of the money spent — and that doesn’t include the overall satisfaction value of enjoying your new space. Don’t be fooled, transformation opportunities often cost more than home ownership obligations, while also returning more on your investment. However, don’t be confused by ‘Zestimates’, what experts claim will “boost value”, or the unqualified advice you find on the internet. The true assessment of your property value is frequently limited to a formal appraisal and ultimately the amount a buyer agrees to pay for your home.
It’s important to factor in time as a key variable when analyzing remodeling costs to determine the game plan that’s right for you. We have all heard the saying “time is money” and that’s no different in the remodeling industry. It could be advantageous for you and your growing family to “think big” and know that when you spend more on a larger scope of work you can save more via economy of scale. So, rather than a linear timeline, completing each phase in order, consider borrowing funds now to accomplish both phases together. You will save on design cost, permitting/inspection fees, inflation cost for labor and materials, project supervision charges, and jobsite/overhead related expenses. The total project will cost less, and you’ll only be inconvenienced once. At the moment, loan interest rates are still historically low, so financing part of the total project cost may be a smart option. Lenders offer programs that factor in the ‘improved value’ – value after the proposed work is complete. The adjusted higher value enables you to leverage new found equity and provides greater borrowing power. Also, don’t lose sight of both your short term and long term goals. How many years do you plan to live in your home? Staying in your home for 6-8+ years usually gives you some latitude to stretch your budget and spend more so you can enjoy it now and into the future. If resale could be on the horizon in just a few years, then one should consider a more conservative approach — limit spending to overdue obligation updates and other more cosmetic improvements that will appeal to a future buyer.
Moving forward, how do you figure out the best game plan? Start by identifying remodeling firms that offer the products and services that suit your needs. Do your due diligence as you would for other professional services. Finding and working with an organization/person you can trust to deliver sound advice is paramount. After selecting a remodeling professional, be honest with them, and yourself, about everything! I’ve found that this sort of relationship promotes a positive collaboration, one that marries creative problem solving with realistic budget goals. This type of teamwork leads to the best, most thoughtful design solutions. You are now in the driver’s seat – well informed and able to make decisions with confidence concerning where to spend dollars that make the most sense for YOU.