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When youre ready to embark on a home improvement project, one of the most important considerations to make regards the return on your investment. Whether youre planning to move, looking to improve your homes value, or simply updating your abode with the latest and greatest, you want to avoid putting too much money into a renovation that wont yield a good return. Sure, you want your renovation to make a difference functionally and aesthetically, but you need to make smart decisions throughout each phase to ensure that it pays for itself.
Your remodeling projects recoup rate will depend on many factors: your neighborhood, the materials you choose, the style of your home, and even the town you live in. Even if your long-term plan is to raise a family and live in the same house for decades, its still important to continuously improve your propertys value to build your equity. However, if your home doesnt exhibit any obvious vulnerabilities, it can be difficult to decide which renovations will do the most to grow your home as an asset. The list of potential improvements may seem endless, but there are some projects that are better choices than others when it comes to seriously increasing the value of your home.
Bathroom and Kitchen Renovation are Solid Bets
When potential buyers enter a home, the kitchen and bathroom are among the first areas that they inspect. This shouldnt be a surprise to anyone whos opened a home design or interior decorating magazine lately. They are typically filled with pictures of amazing kitchens and bathrooms. Interior design trends may come and go, but the homeowners need to create a luxurious bathroom or a beautiful kitchen fit for a chef has never waned. These are such pivotal sections of any home that buyers have no issue with paying more for quality spaces. Bottom line: if you want to get the most bang for your remodeling buck, redo your bathroom or kitchen; but remember, every choice you make has a profound effect on your recoup rate, from the quality of materials you select to the scope of the project.
Dont Invest Too Much
If your renovations main purpose is improving resale value, one of the biggest mistakes you can make is to ignore the correlation between how much you spend vs the current value of your property. The amount of money you should put into a project depends on where you live, the size of your home, and the reason for the project. Though there isnt an exact science to figuring out your magic number, a good rule of thumb is that you shouldnt spend more than 25% of the total value of your home on any renovation project, period.
Though it might be tempting to have the biggest, most luxurious home on the block, the truth is, over-improving will not make your home any more appealing to potential buyers, and it certainly will not do any favors for your pocketbook. A prospective buyer will look at comparable properties in the neighborhood, and if your home is way over the average asking price, youre going to have a hard time selling.
Modest Renovations Can Be Just as Effective
If youre renovating to simply to create the interior space youve always wanted, however, theres nothing wrong with going big, if you have the means to do so. There are plenty of home remodelers out there who are more than willing to fill any room with high-end bells and whistles with features. Similar to the over-improving example above, it can be difficult to resist the urge of opt for flash over function, but its important to remember that even modest home improvements, like outfitting your home with replacement windows can yield a huge recoup rate because it directly mitigates two priority concerns for prospective buyers: moisture intrusion and energy loss. Renovations that address common homeowner concerns have a much higher resale value than purely cosmetic ones that may end up alienating buyers if your aesthetic preferences do not mesh with their own.
If you are dead-set on improving one or more rooms in your home, however, keep in mind that you dont need an exhaustive transformation to gain a significant ROI. According to data published by Remodeling Magazine, a minor kitchen remodel carries an average cost of $14,773, but brings in a return of 87%. The same high-yield dynamic applies to modest bathroom renovations, so long as the changes made optimize the function and comfort of the space.
Even though you may be tempted to plunk down the money for a full renovation, a few savvy updates here and there may do the trick. While some home remodelers do provide reconfiguration services, completely changing a rooms layout is not always the way to get the most out of your kitchen or bathroom. Less-intensive improvements, like cabinet refacing, a fresh paint job, lighting fixture replacement, window treatment, or the installation of high-efficiency appliances can make your space look and feel completely different. Its not about how much money you spend, its about spending wisely so you get the most out of your project. You can easily achieve that wow factor with some easy changes that wont break the bank.
Maximize the Value of Your Home Improvements
Whether youre putting your home up for sale or simply updating your space to improve its functionality or aesthetic, smart renovation choices are a must if want to maximize your recoup rate. The most important thing to remember is that, while a full, transformative remodel has its merits, you should prioritize smaller updates that address concerns commonly held by other homeowners, like energy efficiency, foundational strength, and appliance reliability. If a renovation is too personalized or marginally effective, you run the risk of not being able to leverage it as much as you originally intended when it comes time to list your property.
