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Month: August 2019

Home Improvements: Can You Recoup Your Costs When You Sell?

Home improvements are exciting. An extra room or a new pool is something that anyone could be happy about.

But many home improvements are poor decisions from a financial perspective. It’s not always obvious which home improvements make the most sense financially. Some of the worst home improvements in terms of recouping your costs are the most popular.

Here are some of the worst offenders for the money:

1. Adding a master suite.Master suites are very common in modern homes, but not as common in older construction. Think about the house in which you grew up. Odds are there was not a large master bedroom with an attached bathroom.

This building project is among the worst when it comes to recouping your costs. You can expect to only get about 52% of your money back at selling. Part of the charm of older homes is in the styling. Leave the master bedroom alone.

2. Sunroom addition.Most of us like big windows and lots of natural light. If you’re in a house with small windows, it might make sense to add a sunroom in lieu of adding larger windows. Unfortunately, a sunroom is one of the worst home improvements to make when looking at the financial picture.

Homeowners can expect to get back $0.49 back for every $1.00 spent.

3. Adding a large garage.If you’re like most people, your garage is crammed full of cars, bikes, lawn tools, and all your stuff that won’t fit in the house. A large garage can be appealing to those that want some space and order. However, most prospective homeowners view a large garage as space that won’t get used.

Instead, consider cleaning out the garage you already have. Get rid of the stuff you don’t use. Sweep it out and paint the interior. You might already have enough space to make it work.

If you build a garage, you’re only going to get back around 54% of the cost.

4. Extra bathroom.This is a very common addition, but it only yields a 53% return at sale time. Plumbing is expensive and adds considerable cost to this project. Consider how much an extra bathroom really means to you.

5. Home office. A home office is less appealing to homebuyers than it used to be. With wireless Internet, a person working at home can choose any room in the house to set up shop. It’s also just as easy to head to the local coffee shop or to an outdoor location.

Converting a spare bedroom to a home office will only deliver back 46% of the cost.

6. Getting a backup generator.Backup generators yield about 60 cents on the dollar when you sell your house. Those in areas more prone to natural disasters tend to see a better recoup rate. Also, it’s more of a challenge to lose your heat in Minnesota in winter than in south Texas, so location has a lot to do with your return on investment.

7. Adding a pool. Unless your home is in Florida, California, or Texas, adding a pool can actually be a detriment to selling your house! Many potential homeowners are driven away by the costs and trouble of maintaining a pool that they would only use for a small portion of the year.

The only home improvement that actually pays for itself is replacing a wood entry door with a steal door. All other home improvements are money losers to varying degrees.

Also, remember that for most projects, half of the cost is labor. If you can do the work yourself, then practically all home improvements will yield at least a small profit. Some can even result in a considerable profit.

Of course, if you intend to stay in your home for many years, follow your own desires when choosing home improvement projects. They’ll bring you enjoyment for many years to come!

If you’re improving your home to get more money at sale time, think of these returns on investment and go with the ones that will most increase the value and salability of your home.

Maintaining your home is the most important thing you can do to ensure your home retains its value. Although it will take some effort on your part, making timely and necessary home improvements will make the home more comfortable for you and your family, while adding to the property value.

Use this worksheet to evaluate whether it’s time for you to do some home improvement projects.

1. Go outside to the street and look at your property. Write down any areas that you notice are not becoming to your property and need attention.

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2. Document here what you plan to do to each of these areas to increase your home’s value.

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3. Since the kitchen is the most important room of the house, how does your kitchen look? What changes, if any, would you like to make to each of these aspects of your kitchen?

Cabinets: __________________________________________________________________

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Flooring: __________________________________________________________________

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Countertops: __________________________________________________________________ __________________________________________________________________

Lighting: __________________________________________________________________

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4. Jot down two changes you can make to your kitchen to make it more marketable.

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5. In your bathroom(s), how do the cabinet, sink, countertop, and bathtub look? Do you need to change or remodel any of these elements? If so, what will you do?

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6. Record two things you can do to spruce up your bathroom without spending a lot of cash.

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7. Evaluate your home’s lighting. Do you have rooms that don’t have enough light? What about rooms where you’ve overdone the lighting? What will you do to change the lighting? Consider simple fixes, too, like changing lamps or putting in a lower wattage light bulb.

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8. Have you ever had your insulation level evaluated? If so, when? Have at least 2 experts come out and check out your insulation to see if you home needs more to maintain lower heating and cooling costs. Also, use this space to record names and numbers of insulation experts to call.

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9. Looking at each room in your home, how do the walls appear? Are they marked up, faded, or even peeling? Do a walkthrough now to determine which rooms need to be painted. The good news is that paint is an inexpensive way to bring out the best in your home.

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Your home is truly your castle. Protect your precious investment by periodically doing proper home improvements.

“It matters less to a person where they are born than where they can live.”

-Proverb

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