Whether you've been in your house for two months or 10 years, it's natural to want to make changes. Home improvement costs can add up quickly but, if you select smart projects, you can recoup a lot of what you spend when you sell the house.
b is for basics
Keep in mind several principles for home improvement projects that will increase the value of your home: Simplicity is key. Stick to basics. Avoid customization.
Start by surveying houses on your street and in your neighborhood. What is your home's value compared with nearby properties? If the value is on the lower end, you have more flexibility to make dramatic or costly improvements. If your house is one of the most expensive in your neighborhood, be careful not to invest too much money so you don't price yourself out of the neighborhood and make it hard to find a buyer later.
Consider several fundamental concepts:
• Adding purpose or function to an awkward space
• Finishing existing spaces in your home
• Finding ways to use wasted space
• Keeping projects within the style of your home and neighborhood
Before you pick up a hammer or hire a contractor, invest some time in planning, even if you don't intend to make all improvements at once. If you want to make big changes, spend time with a designer or architect to lay out a master plan and get expert feedback on your ideas.Understand that there are few projects where you'll recoup all of your invested costs. Timing also can affect how much of your money you can get back when you sell the home. For example, structural changes that add function to a room have longer staying power than upgraded appliances, which will become outdated much faster. Your home improvement goals might change if you plan to move in six months versus five years.
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m is for major improvements
When asked about home improvements, the first thing many people think of is major change or renovation. Steve Veno, president of Mulberry Builders, a home remodeler in Chanhassen, Minn., says working within your existing structure is the most efficient use of money. He explains, "For example, if you can add a room or two above a garage instead of building an additional foundation, you'll save money."
Here are several major projects that, executed well, most likely will add value:
• The kitchen is the soul of many homes. Ben Joerg has been an exclusive buyer's agent with Home Buyer's Inc. in Minneapolis for 15 years, and emphasizes how important the kitchen is. "The first thing my clients do when they walk into a home is go to the kitchen," Joerg says. "You won't earn all your money back from a kitchen upgrade, but you'll get a large percentage back, in addition to increased salability."
Environmentally friendly components are key in a kitchen upgrade. "Buyers are becoming more and more interested in ecofriendly and sustainable options," Joerg says. "A recycled glass backsplash can change the look of your whole kitchen for less than $1,000," he says. Another green option is to replace old appliances with energy-efficient versions, or to install bamboo flooring.
Other kitchen project ideas include:
o Upgrading countertops to add visual impact
o Replacing or re-facing cabinets
o Adding usable space with a center island
o Replacing sinks and floors
o Improving lighting to make it feel warmer and more inviting
o Adding a pantry to provide coveted storage space
"Keep in mind you need to be flexible with kitchen remodels," Veno says. "People spend the largest number of waking hours in the kitchen. A kitchen remodel adds the most value, but it's also the most disruptive."
• Functional changes might not be as fun or dramatic as a kitchen upgrade, but they can prove valuable. Replacing old windows with energy-efficient ones can be a smart choice for comfort—but be realistic about payback from energy savings, which will take decades. Replacing siding also can add value.
• Bathrooms are another high-impact improvement. Veno describes recent trends in bathroom remodeling. "Tubs are out," he says. "Showers appeal to buyers." He points out that having one tub is important for resale but, if you have multiple tubs, consider replacing with showers.
Other bathroom projects include:
o Adding a second bathroom to a single family home
o Upgrading outdated bathrooms by replacing tile or grout, sinks, and fixtures
o Adding a second sink in a master bathroom if there's space
m is also for minor improvements
There also are lower-cost options to increase the value of your home.
• Apply a fresh coat of paint. "Painting is the first thing I suggest doing," Joerg says. "It tells a potential buyer a lot about how the homeowner treated the home." He recommends using light to neutral colors.
• Rejuvenate your home's landscaping and entryway. "Curb appeal is where it all starts for a buyer—it sets the tone for the entire home," Veno says. "If you don't have existing landscaping, spending a weekend adding clean, low-maintenance landscaping can add up to $10,000 to $20,000 to the value of your home."
• Refinish hardwood floors. The condition of the rest of your house can help you decide if it pays to go to the trouble and expense of refinishing floors.
• Upgrade light fixtures. "Swapping outdated fixtures for more modern styles can have a big impact on a small budget," Joerg advises.
n is for no-nos
"Anything dealing with personal enjoyment is not a good investment if you're thinking of selling your home in the near future," Joerg cautions. He explains that projects like putting in a pool, personal spa, sunroom, or oversized garage might bring you personal joy, and thus might be worth it if you aren't planning to move soon.
But if your goal is to recoup costs, highly customized projects like a home theater, gourmet kitchen, sunroom, or home office won't be beneficial. Two exceptions to this guideline are luxury homes and specific locales. For example, a pool might be beneficial in warmer climates, or expected in a high-end neighborhood.
Veno also cautions that basement remodels might not be a good investment. "In many suburban homes, a finished basement is an expectation. If you do a basement remodel, they are often highly customized to the owner's preference," he says. Conversely, many older homes were not built to have habitable basements. "In these older homes, you'll often need to spend a lot to waterproof and insulate the basement before refinishing," he explains. You're not likely to recoup dollars you spend this way.
Once you've determined which projects you want to tackle, meet with a home loan specialist at your credit union. A credit union home equity loan is a low-cost way to pay for those improvement projects. Research, planning, and quality execution of projects will allow you to enjoy improvements now, and they can help pay for themselves in increased home value when you sell.