Renovate For Real Estate Gains

Renovate for​ Real Estate Gains
A home is​ so much more than a​ roof over our heads .​
It is​ our largest purchase (unless you like thoroughbreds or​ really expensive shoes), and​ almost always a​ significant portion of​ our assets at​ retirement .​
So when it​ comes to​ improving your home through renovations, it's important to​ think beyond cosmetic appeal and​ look at​ how those projects can improve your wealth.
We may think of​ a​ home as​ a​ long-term purchase, but in​ fact a​ great deal of​ us will own a​ home for​ just 5-7 years .​
So look very closely at​ the​ money you spend on your home .​
Look for​ projects that will add the​ most perceived value to​ your home for​ the​ least cost .​
Decision-making should be guided by the​ big picture – a​ financial plan that includes your retirement goals, acceptable debt levels, and​ tax planning .​
I​ encourage you to​ think about potential home renovation projects in​ terms of​ three categories: resale value, maintenance costs, and​ potential risk .​
Made for​ the​ Market
Some of​ the​ design tips you may have picked up watching Trading Spaces might prove useful .​
The types of​ changes they make, cosmetic rather than foundational (plumbing, electrical, etc.), may be the​ best way to​ improve your home's value without spending a​ bundle .​
At very little cost, painting is​ the​ No .​
1 home improvement .​
a​ well-coordinated, modern color treatment can raise the​ selling price of​ your home significantly .​
Other cosmetic projects involving light fixtures, tiles or​ flooring, wallpaper, or​ new trim, can also pay off well, particularly in​ kitchens and​ bathrooms (dollar-for-dollar, these rooms tend to​ reward your efforts more so than others).
Pragmatic home enhancements like adding central air or​ a​ gas fireplace generally will not earn more in​ sales value than their cost .​
These types of​ additions involve well-known, fixed costs, and​ depreciation always takes a​ bite .​
Luxury items like swimming pools and​ hot tubs generally score low in​ terms of​ resale value .​
Swimming pools typically add about $5,000 to​ the​ home's resale value – not much considering a​ pool costs about $20,000 to​ install.
Major house additions should be carefully considered .​
These usually involve electrical, structural or​ plumbing work that is​ hard to​ recover .​
What areas pay off most? Bedrooms .​
Adding a​ bedroom is​ a​ big plus, while a​ family room can enhance the​ value of​ a​ smaller home .​
Basements score low; they are still considered by many buyers as​ a​ cold, damp place to​ store things .​
Reduce Maintenance Costs
If you plan to​ spend at​ least a​ few more years in​ your home, you might leave the​ cosmetic fixes for​ now and​ instead look for​ ways to​ reduce maintenance costs .​
Heating and​ water should be your first targets .​
It's impressive what you can do with less than $100 of​ weatherproofing products and​ a​ little know-how .​
Look to​ for​ energy conservation recommendations .​
Similarly, water usage can be reduced through new fixtures .​
Check with your local government for​ possible rebates on certain water-efficient products .​
It's tough to​ immediately see the​ payoff of​ your expenses here, but look to​ year-over-year consumption levels (usually displayed on your water or​ energy bill) to​ see how you're doing.
Monitor Risk
As with investing, homeowners should not let opportunity supplant a​ sound evaluation of​ risk .​
Home insurance is​ a​ given, but how sure are you that your house is​ up to​ code? a​ homeowner I​ know was sued after a​ visitor tripped on his steps – turns out the​ height of​ each step wasn't quite up to​ code .​
One home inspector estimates that each home he inspects has between 5 and​ 20 code violations, many that are simple to​ fix .​
Also, preventive maintenance is​ always a​ wise investment in​ some areas where the​ cost of​ complications is​ high .​
Quality roofing, wiring and​ water drainage (eaves troughs, etc.) will prevent unexpected and​ costly damage to​ your home .​
The idea with these projects is​ not how much you'll gain, but how much you'll avoid losing.
So remember, next time you survey your assets and​ investments, give some thought to​ the​ value of​ your home .​
Look for​ efficient improvements – changes that will earn or​ save you more money than they cost to​ implement .​
Ask yourself if​ a​ pool is​ a​ good idea when an​ extra bedroom might cost the​ same but increase the​ value of​ your home by $15,000 more.

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