Renovate, Remodel, or Get Out – Guidelines to Determine the Right Home
When you’re living in a house that doesn’t have enough room or fails to meet the needs of your family, deciding what is the right next step can be very difficult. These guidelines will help you to determine which investment will take you from the wrong house to the right home.
It may be that you won’t need to go so far as a renovation to get more from the place where you live. If the complaints you have are centered on superficial issues, a minor remodel may do the trick. Consider whether or not you would be happier in your current home with new flooring, appliances, or paint. To get an idea of what this would cost you, research what types of materials you want to use and how much any required labor would cost. This is an excellent option if you are trying to update the home you’ll stay in, or if you’re trying to improve the value of a house for sale without spending a fortune.
More and more often homeowners and buyers are seeing the value of energy efficiency. Even small, inexpensive changes can reduce both monthly bills and environmental impact, and the right green updates can add value as well as comfort. Look into Energy Star rated appliances as a place to start, and consider larger upgrades such as a tankless water heater or mini-split ductless air conditioner if you have a little more capital to invest.
One of the most important questions to ask when deciding whether to renovate a home is whether or not this will be your ‘forever home.’ Really in depth renovations can cost as much as a relocation, but for the home you plan to grow old in, that expense may very well be worth it, especially if a small addition such as another bathroom or one more bedroom would make this the perfect home. Remember, no amount of renovation will change the location of your home, so if the view or the nearby highway is a problem, it’s probably time to consider selling.
Making a well-informed decision will require you to understand the potential costs of renovation. Again, you’ll want to investigate the materials and labor that will be required so that you will be able to effectively negotiate with the contractor or subcontractors you’ll need to hire. It is also wise to set aside about 10-20% of the estimate to cover additional costs that are unexpected, but nearly inevitable.
Be sure to take into account the indirect costs of a renovation as well. Will the inconvenience you face while the work is going on be more than you and your family can take? Will you need temporary housing while the work is being done? The cost of a rental or hotel can add up very quickly. Will you require a loan to complete the work? If so, add the interest and the loan origination fees to the predicted cost of your renovation.
Before you begin or commit to any costs, have a professional contract from your area come in and evaluate the property. This will ensure that there aren’t any building codes or structural issues that are going to prevent you from being able to make the changes you want.
If you’re renovating a house in order to make it easier to sell or to raise the value of the home, consider carefully the return on investment that you can expect from any changes that you make. For example, renovating a kitchen will increase the value of the home much more than adding an office or family room. It is also worth noting that the more money you spend on the renovation, the lower the percent of return will be.
For example, by spending $35,000 on a kitchen update, you may raise the value by around $50,000, while pouring $90,000 into the same kitchen will probably only add around $65,000 in equity. You’ll also want to avoid renovating to the point that your house becomes the most expensive one in the neighborhood. This will slow down the sale and make it less likely that you’ll recoup the investments you’ve made.
If the house you live in will need massive renovations in order to become the home you want, or if it is so old that renovating would be too complicated, relocating may be the best option. Start by evaluating the price of your current home and consider getting preapproved for a loan to find out how much you may have to work with for your house hunting.
Investigate how likely it will be that you’re able to sell your home quickly. Look into how prices have changed in your neighborhood, the speed with which other people are selling their homes, and how many homes are on the market in the area. If the market is flooded or the prices are stagnating, now may not be the time to list your property.
Determine your ideal neighborhood and spend some time shopping around open houses and other listings to see if the right house in the right area is listed at this time. You’ll get an idea of what is available and what you’ll be expected to pay. Keep in mind the indirect costs, such as closing fees and movers to get you into your new home. Also remember that new home buyers spend about $3300 on average making small updates and improvements in the first two years after they move in, which doesn’t take into account necessary but often overlooked expenses such as cleaning supplies or blinds.
Don’t let the fact that your home needs some work convince you that it won’t sell. By using a real estate agent who works with investors and pricing the property competitively, you may be able to get more than you think out of it.
Whether you’re looking to sell your home or improve it for yourself or for sale, it may be that the best answer is to give it a little time and check the market again. Being listed for too long without selling will push down the price of any property, so don’t try to sell in a weak market. Reevaluate in six months, and if things still aren’t picking up in the home sales department, maybe it is time to consider some remodeling or renovating to make the home fit you better for a while. If you make careful, well-thought out decisions about what to change, when the time does come to sell, you’ll be able to ask for more than you would now.