When considering a home remodeling project, most people think about how much value they can add to their home’s eventual selling price. While this is good money management, it fails to take into account the intangible return on your money they get from the enhanced quality of their home life.
Cost effective remodeling is the practice of ensuring that the value added to your current quality of life and the home’s eventual resale price is equal to or more than the cost of the remodeling.
Maybe you are planning adding an outdoor deck. Statistics from the past few years tell us that you will get about 85% of the cost of the new deck back in the form of a higher market value for your property. But what about all the relaxation, socializing and enjoyment you will get?
Don’t neglect to consider the intangible return; you are making an investment in your quality of life as well. In fact, it makes much more sense to remodel with the aim of improving your own satisfaction with the home, for the simple reason that the more you remodel to suit your own special tastes and comforts, the less likely it will be that the house will suit someone else’s.
Another important point is that many people undertake remodeling on houses they do not plan to stay in long, “flipping” it in a quick sale. In a rapidly rising real estate market, this can work out, but it is known that the longer you stay in a home, they greater the total return on your remodeling investment when you do sell.
Remodeling Payback Tips
– Adding a second bathroom will return up to 90 percent of it’s cost, but the same is not true of adding a third bathroom, unless the home has more than four bedrooms.
– Remodeling visibly deteriorated components of the house, such as repainting a weathered exterior, or replacing roofing shingles, will pay back much better than replacing deteriorated but invisible parts, like plumbing or wiring. (Any systems clearly not functioning or up to code will show up in an inspector’s report and lower the market value, so get them fixed)
– Kitchen or bathroom remodeling can pay back up to 90 percent of the cost if your house if 30 years old or more, but in a newer home will tend to not add as much value.
-Installation of energy efficient windows will return 30 to 50 percent of the cost in selling value, but don’t forget to figure in the amount you will save on energy bills. Compare the resulting figure to repairing deteriorated windows, which has a seemingly better return, of about 70%.
-Keep remodels simple and basic yet functional. In-ground swimming pools and exotic landscaping can scare away buyers with visions of too much maintenance work.
– Always do basic maintenance and repairs before any remodeling. You will save on future, inflated maintenance costs if you stay in the home, and a house in top condition will present better to buyers and be appraised at a higher price.
Photo credits, top to bottom: scarletgreen, brianc