The Great Debate: Can You Overdo It With Home Improvement?
You’ve undoubtedly heard the mantra “location, location, location” as a determining factor when buying a home and figuring out how much to pay for it. The same advice applies when it comes to a single renovation, too. You should always renew according to your area and local comparisons. If you fail to heed data, you could cause money to be thrown out of your newly installed wood-framed windows. Let’s dig deeper.
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1. You have the most leeway with your personal residence
When it comes to your personal residence, you generally have the most freedom to make home improvements. After all, you live there, and if you want to imitate the fanciest home out of a design magazine with mottled wallpaper, a La Cornue collection, and a basement screening room with stadium seating, that’s your business. Don’t expect to be able to charge more than local market companies, though, if you choose to sell them—or greater than neighborhood rents, if you decide to rent them out.
Also, you may have to renovate to attract the largest segment of buyers if you sell later. A unique personalization will not help you sell your home. So textured wallpaper, pin-up deer heads, metallic mural and similar unique touches you loved about your home should go. Make it a breezy and inviting blank canvas with light colors and quartz or granite instead of marble.
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2. Upgraded hardware brings limited revenue
Homeowners generally get the most out of their kitchen and bathroom renovation efforts. Ready-made attics or basements and home offices are also worthwhile investments. However, some investments make less sense. While you’re renovating your kitchen, it’s easy to become hardware-crazy and not see any return for the money invested in those new appliances.
A $1,000 refrigerator looks similar to a $10,000 refrigerator, and they both do the same job. Buyers usually won’t notice much of a difference, and renters will care more about energy efficiency. Therefore, it may make sense to update older devices, but before you hand out thousands to high-end models, check with local companies and budget accordingly.
Related: 12 energy-saving appliances that will save you money in 2023
3. Choose cheaper materials that look expensive
It is possible to achieve a high-end look on a mid-priced budget. Quartz countertops have a fairly uniform price and always look good. Chosen wisely in light, beachy colors (not the striped gray look), vinyl plank flooring mimics modern white oak well without having to shell out more money for hardwood and install it.
Cabinets can also be made to look like they cost more than you paid for. Refinishing, repainting, and adding new hardware can look good right away. If your cabinet fronts are old-fashioned, buying new ones and then staining or painting them is a less expensive alternative to buying all new cabinets. It will add the “wow factor” without the expense of brand new cabinets.
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4. Watch interest rates to see how your home is priced
Another factor to consider as interest rates rise in the housing market is awareness of what buyers can afford. The flipped home that sold a year ago for $400,000 may have had a mortgage payment of $1,800 per month. Today, the same home might carry a $2,800 mortgage, which means you have to sell for less. This will require trimming the renovation budget to turn a profit.
Repairing windows rather than replacing them, and refinishing cabinets, tiles, and fireplaces are just some of the ways flappers can cut costs to keep black. Simple upgrades like new garage doors, painting inside and out, new gutters, and landscaping are affordable but have a big impact that can affect the selling price.
Related: 4 crucial things to know when pricing your home for sale in today’s volatile market
5. Rentals require reasonable upgrades
Rising interest rates have forced many potential homeowners to continue renting, driving up rents. It also means that landlords don’t have to spend as much on improving their homes and apartments to keep them fully engaged in market rents. Location, of course, is another big factor.
In general with rentals, improvements do not need to be as expensive as those in sold housing. Owners should spend their money on plumbing and cosmetic upgrades (kitchen, bathroom, flooring, paint) to make sure there is no water damage or other maintenance and to make the unit presentable. Spending extra cash on luxury tiling, paneling or fixtures is often money down the drain.
Related: How a Comprehensive Short-Term Rental Strategy Can Increase Rental Income
5. Renewing leases for long term cash flows
Many first time landlords make the mistake of improving or improving a rental property as if it were a personal residence. Rentals need to be hard-pressed, because many renters don’t honor rental care as they do in their own homes. When the tenants move out, the landlord needs to quickly turn the property around to keep the income flowing.
Homeowners who plan to move to another home and rent out their first home should improve the home enough to have a nice appearance and easy maintenance. Here are four basic cost-effective renovations to consider in your rental property:
- Choose easy-care flooring like plank vinyl, which is hard-wearing, water-resistant, and easy to clean. Stay away from carpets that look fine for the first week but may need to be replaced after each renter.
- If you are going to spend a little money, use some of the money to get a durable and reliable toilet. Landlords spend a lot of money fixing clogged or leaking toilets. Invest in a model with strong flow.
- Expensive gas ranges powered by famous chefs are a fire hazard in rentals. Induction ranges are a better investment, as they are fireproof. You can even save some money on insurance.
- Investing in a garbage disposal unit saves clogged drains and visits to the plumber.
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6. Market conditions have a significant impact
Improving or over-improving any home can be financially detrimental to the seller or owner. When renewing, consider market conditions and competition. Post-pandemic during the first half of 2022, renovations of personal property for sale have been minimal due to a lack of inventory and low interest rates, leading to numerous bids and bidding wars, regardless of the condition of the home. Moreover, only the house can assess what the market will be. A high-end renovation will not necessarily result in a valuation above the average renovation if it is not supported by the region or the market.
Over-improving the folding house can hurt the seller in a market where margins are tight, like the 2023 market so far. Buyers face a cap on what they can afford and get approved. If you improve further with the expectation of receiving a higher bid, you could be in for a loss, as many flappers who have started their renovations in a frothy market now have to do.
7. Ignore the AC at your peril
If you’re a homebody, budget is everything. In a tight market, you need to choose your renovations wisely. However, air conditioning is something you can’t skimp on. The increasingly hot summers have made central air conditioning a must in every state. Expecting buyers to make do with a portable window unit or invest in their own HVAC system isn’t practical.
If you own an older home, you don’t have to go to the expense of new ductwork and an expensive AC system. Small split duct systems are cost effective and easy to install.
Related: Top Trends for HVAC Installers
8. Unnecessary improvements
A few improvements will not add anything to the home’s resale value. In addition to hardware, there are two unnecessary optimizations:
Stone/patio or walkway: Stone patios and walkways look good but can be expensive to install without much impact on the resale price. If you want to spruce up your home’s exterior, choose stamped and stained concrete, interlocking roofing tiles, artificial grass, or gravel. They’re attractive, not expensive, and you can probably handle the project yourself.
Tiled shower floors: If you want reasonable savings on the facet, use a one-piece bathtub instead of renting a tile. One-piece pans are becoming increasingly stylish and easy to install. Their presence in your home will not affect its sale price.
Related: 12 exterior upgrades that make your home more valuable
9. Home car chargers will be increasingly important
Although adding solar panels to show your eco-friendly credentials may not guarantee a return on investment when you sell your home, it can add value. Adding a home car charger can also speed up a home sale. As the world shifts from gas-powered cars to electric vehicles, having a pre-installed, hard-wired Level 2 home charger included with home swings and resale homes will be increasingly important. New homeowners will not have to go through the expense and hassle of installing chargers.