As property values trend upwards in many places around the United States, real estate owners frequently wrestle with a complex question: does it make sense to renovate and update an older home right now? And if so, which home improvements will generate the biggest return on investment?
Perhaps you’ve considered launching this type of project? In some situations, timely renovations lead to increased profits at the closing table when an owner sells the realty. Yet not every potential improvement makes good financial sense.
The Problem of Cost-Effectiveness
Unfortunately, no one can ever guarantee a particular home improvement will prove profitable. Why? Every piece of real estate proves unique! A property in one location may soar in value following the completion of a renovation. Yet the same type of improvement may only raise the value of another residence in the same town by a few hundred dollars.
Many factors enter into increases in property values. These elements often include the condition and age of the dwelling before work commences, the skill of the contractor, the quality of the building materials, the location of the property, and, of course, the type of home improvement. Additionally, owners need to consider another key issue: while a specific addition may enhance the value of the property over the course of time, not every modification produces rapid increases in value. If you install a $100,000 improvement in a $25,000 home, you won’t necessarily obtain a $125,000 value on the day of completion. Most homeowners benefit by discussing renovation projects in detail with experienced real estate experts.
Some Frequently Lucrative Renovations
Nevertheless, in many cases renovators do realize attractive increases in value when they undertake home improvements. While exceptions always occur, some types of projects tend to confer greater value than others. They offer the “biggest bang for the buck”! Consider a few popular projects:
1. Renovating (or Adding) Bathrooms
Updating the bathrooms in an older home remains one of the most in-demand home improvement projects. In some situations, taking this step significantly augments the marketability and attractiveness of the residence. Although frequently expensive, this type of renovation often helps breathe new life into a dated, uncomfortable dwelling.
2. Renovating Kitchens
Everyone in a household benefits from kitchen renovations. This type of home improvement project may range in scope. One property owner may add new kitchen cabinets and shelving; another may tear down interior walls or otherwise substantially modify an older kitchen. Sometimes well-executed kitchen rehabs offer lucrative returns on investment!
3. Improving The Grounds
Most experts agree devoting time and attention to landscaping improvements can become one of the most cost-effective renovation projects. However, it remains very important to keep this type of undertaking within budget; owners who grow too ambitious and implement improvements they cannot complete may actually damage a home’s “curb appeal”. Attractive landscaping frequently contributes to marketability.
4. Renovating Home Exteriors (Roofs, Siding, Doors, Windows)
Undertaken on a case-by-case basis, renovations involving roofing, siding, windows, or doors frequently prove exceedingly smart. These types of upgrades sometimes dramatically modify the first impression the residence creates. Once again, you’ll want to plan this type of project with care in order to ensure you obtain solid value for your investment.
5. Renovating Basements, Attics, or Garages
Sometimes updating and improving these locations, e.g. by adding a separate apartment in these sites, yields significant returns. This type of renovation often requires a large investment of capital, however. You’ll also want to check zoning regulations in your area carefully before undertaking one of these major renovation efforts, particularly if you hope to add a rental or a home office to an existing residential property.
Evaluate Your Next Project With Experts!
Before embarking on any expensive home renovation, it usually makes sense to discuss your specific project with knowledgeable experts. You might find it helpful to consult with lenders, contractors, and appraisers in advance. If all your experts recommend making a proposed renovation, the improvement will likely enhance your home’s value!