Is My Home Renovation Project a Good Investment? All homeowners will ask this question at one time or another, and the answer really depends on the reason for any given home renovation project. There are basically three options, you are renovating to fix your home repairs and improve the living conditions in your existing home or because you want to sell it and know you can list it for a better price, or you are looking to buy a home and trying to figure out if it’s worth the hassle to buy a particular fixer-upper, as well your total out-of-pocket house price.
Renovations to Improve Your Use of Your Home
If you are making a renovation to improve your own living conditions, your only concern will be about any impact on the sale of your home in the future. In this case there are some basic rules you should follow.
- If the project is meant to accommodate a hobby of yours but will require maintenance costs over time, then it is probably not a good investment. A good example of this is swimming pools. Some buyers hate them because of the maintenance costs, necessary labor and repairs, and the relative little use they get in a short season.
- On the flip side, any project that improves and modernizes the utility of a home does a lot more to improve its value when it comes time to sell (think kitchens and bathrooms). The best advice here is do what you need to do and not worry too much about ROI other than your ability to sell it or rent it one day. Your house is your biggest asset (unless you have a Rolls Royce parked in front it, then you probably have other, bigger assets). Because of its great worth, you cannot afford to have it sit on the market if you have to move, for example. You should make sure that this valuable asset can be easily liquidated – renovations that update and improve your home can help you do that.
Overall, you won’t go wrong if you invest in your kitchen or bathroom, add rooms, or upgrade the windows or front door. You can easily get an estimate on Kukun’s Renovation Estimator and proceed to calculate your ROR (return on renovation).
Renovations to Improve the Selling Price of Your Home
If you are renovating because you want to sell your house, we have good news for you. You don’t have to spend a whole lot of money to make it look better and more desirable.
The general rule is make it visually appealing and up to date. Your front door and bathrooms are key. Think about improvements on curb appeal, the entryway/foyer, paint and countertops, which should do the trick. You don’t have to invest in the most expensive materials and you don’t have to do anything foundational in nature. It is all about visual appeal. If you have that, your buyer is going to be impressed. A great real estate agent can help you out, but if you are not ready to talk to one, you can follow these guidelines easily.
You can calculate the cost of any renovations and proceed to calculate the potential listing price by going to Kukun’s Renovation Estimator to estimate your project cost (make sure you use the makeover option), and then you can calculate the ROR. This handy feature is reasonably accurate if you live in a dense area where there is a lot of real estate movement.
Renovations to Improve a Fixer-Upper
If you are buying a home that you will need to sink another sum into to make it a better home for you, then the above advice also applies to you. Make sure your home can be easily sold or rented after any renovations you do. You can use Kukun’s cutting-edge Renovation Estimator to determine your out-of-pocket cost and your potential ROR (return on renovation).
You should think about a scenario where you have multiple potential properties to choose from. In this case, you should consider the potential of the property’s location. More upscale or desirable areas may make more sense from a financial perspective. It’s can be a good idea to invest in towns where you know there a big company will be setting up shop (bringing jobs and new people). You can use Kukun’s ROR calculator to see which area may bring better value for you in the long run.
Consider the following:
- Job growth in the area
- Average age of inhabitants (younger towns tend to acquire more growth over time)
- The health and trends of the real estate market in the specific area or zip code (areas close to walking zones, parks and cafes do much better.
- Overall, renovation is a great equity builder. Doing it economically, intelligently and controllably can be a good investment. Make sure you hire the right person with the right references and permit history, and use Kukun’s Compare Smart Bids to make sure you control your project’s timing and budget.