Saturday, 4 June 2011
A good investment in a renovation should increase the value of your home by at least the amount of money you spent, or close to it. A bad one doesn't get you much of your money back. Here are some investments that have proven to return their value, or close to it:
1. Low-cost improvements that make your home look better: Painting, new wallpaper, and items like new rugs and curtains help to brighten and improve the look of a home, and add value to your house if they are done close to the time of sale.
2. New or improved kitchens and bathrooms: Improvements to your kitchen and bathroom seem most likely to increase the value of your home. Keep in mind that these improvements lose value over time.
3. Improvements to the living room and the master bedroom: These are also good investments and will usually return most of the money you spent, if not more.
4. Investments in more efficient use of energy: Oil, gas, and hydro costs continue to go up. That's becoming more of a concern when people are looking to buy a home. You can make your home more energy efficient as an investment in its value. Some government programs help reduce the costs of these projects. Also, consider buying appliances that waste less energy.
5. Keeping up with repairs. If you do a little at a time, you can avoid doing a lot of expensive repairs at the same time. A reasonable amount to spend yearly is 1% to 2% of the value of your home.
What are some renovations that don't add much value to my home?
Swimming pool: Make sure you want a pool before you invest in a pool. The cost of putting in one won't show up in the price that you get when you sell a home.
Costly appliances: Most people won't want to pay an extra $4,000 for your home to pay for a $7,000 refrigerator instead of a $1,200 refrigerator. If you pay thousands of dollars for top-of-the-line appliances, enjoy them. You probably won't get your money back if you sell them with your home.
Costly landscaping: The way your home looks from the street can really help interest buyers. It's called 'curb appeal.' But if you spend $30,000 in landscaping, don't expect to get it all back. Most buyers probably won't see or appreciate the value.
Renovating in an area where homes are being torn down: Tear-down activity involves homes being sold, torn down, and replaced by bigger, more expensive homes. If someone is going to buy your home and tear it down, a renovation won't return any of your money. The buyer will have no interest in the building, just in the land.Remember: Don't assume you will get all your money back from a renovation.
The key to renovating is to keep the house in good repair and do the renovations you want to enjoy. If you think you might be selling in the near future, focus on renovations that are more likely to get your money back.