It is a common question. Should I renovate my house? I come across homeowners who are always contemplating this question. They may love the idea of creating updated and functional spaces but the other things that go along with it…not as much. Here’s some questions to get you thinking before you decide to move forward with a remodel:
Will You Recoup the Costs of Remodeling?
You bought your house for $300,000, put in $50,000 worth of work, and sold it for $350,000 or more. Sounds like a win, right? Not necessarily.
When you sell a house, so many factors are at play that it’s impossible to identify which contributes most to the sales price. Factors unrelated to remodeling may have a bigger impact on a house’s sales price–the economy, comparables, mortgage rates, etc. If you made a significant change like an addition to add more square footage then a higher sales price is likely but still not a guarantee.
Some remodels, like a large kitchen remodel, retain high value. Other remodels show little to no increase in value. But no remodel will, by itself, return 100% of the cost you put into it.
Bonus Tip: Before you decide on a major renovation (like a kitchen) look at the comparable sales in your area. The homes with updated spaces can serve as a great guide for your renovation and to keep you from overspending.
Add on More Time and More Money Than You Think
Contractors often have a hard time delivering projects on time and on budget. If they could figure out how to do it, they would create consistent work for as long as they were in business. It is more realistic for larger remodeling projects to have change orders that increase the cost and extend the completion date. Even small remodels have a special way of inching up in cost.
Bonus Tip: Get more than one estimate and get an average. Add up to 25% to the cost and the completion date. Just in case.
Even Though You Think You Can Do It Doesn’t Mean You Should
Blame all the TV shows. You see people doing projects and you want to tackle them yourself. But some projects are best left to pro’s like installing A/C’s and furnaces, electrical wiring, etc. Other projects are better options for those who want to create their own spaces. Think interior paint, tile and flooring.
If you are looking to knock some projects out yourself, it can be done. Things tend to have a different expense when you think of using your time when someone experienced could do it in less than a quarter of that time. If you begin to do something on your own and then bring a contractor in to finish, it may be more costly than if they had been hired from the beginning.
Bonus Tip: Divide the projects into categories. Pro or DIY. If you aren’t sure add it to the Pro side.
Why Exactly Are You Remodeling Your Home Anyway?
Sometimes people believe they need to renovate to be able to sell their house. Maybe they purchased a fixer upper with the idea they would gradually do work on it themselves. Or maybe they were suddenly put into a situation where they are responsible for a house they inherited. In order to make the most return, they believe they need to make improvements. In both of these cases, the easier route may be to sell the house “as-is”. Not additional investments involved and a quick resolution can be a great option.
If you are looking to complete a renovation because you love your home and are planning on staying for awhile, that’s a great reason too. Or maybe you start with a smaller renovation and transition to a larger one in the future. Whatever your reason the proper planning and budgeting can help to make your remodel outcome as painless as possible.
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Amber
So you’ve purchased a house to flip. Now what?
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