Wood Construction Inc.

Remodeling

Investing in Remodeling Pays Off in More than Dollars

Many homeowners are surprised to learn that the equity in their home comprises a larger portion of their net wealth than the holdings in their stock market or retirement funds. Compared to conventional financial investments that rise and fall with regular frequency, locally, housing has proven to be a stable and sound investment that keeps up with inflation in most years and outpaces it in others.

“What improvements will add the most value to my home?” To answer that question, it is important to understand that remodeling – and your home for that matter – is different from other investments that are primarily financial in nature. What’s unique about housing is that the “investor” or owner receives the immediate benefit of being able to occupy and enjoy their investment; i.e., live in it, all the while it is growing in value. Stocks and bonds don’t deliver on this aspect.

The other part of your investment return is the increase in resale value that the remodel adds to your home. Ultimately it is a professional real estate appraiser who will decide the financial return of any remodeling you do through the price he or she assigns to your home when you decide to refinance your mortgage or sell your home. The cold hard truth, however, is that real estate appraisals are more an art than an exacting science.

The price of your home will largely depend on the prices that comparable homes recently sold for in your neighborhood. The value assigned to the improvements you made to your home depends on a number of variables but depend heavily on the location of your home as well as its overall condition. Some remodeling projects lift the value of a home by the entire cost of the remodel and sometimes by even more.

Here are some rules that you should consider to increase the dollars you get back from your remodeling investment:

Maintaining your home in good repair is the most critical of all investments that you can make to your home. The shape it’s in matters as much if not more than what other attributes your home may have.

The quality of the work you have done on your home is another factor that can’t be ignored. Shoddy workmanship, low-grade materials and inferior products will wipe out any value the remodeling might have added to your home.

Remodel for yourself and your own family, not the next owner. It is a gamble to predict what the likes and dislikes of the next owner might be. Keep in mind, however, the more your tastes stray from the norm of most of your neighbors, the less likely you are to get maximum return from your improvements. Stay with styles, colors and features that have broad appeal.

Kitchens and bath remodels are the two most popular remodeling projects year-in and year-out, no matter where you live. These two rooms carry the most weight when it comes time to sell your home. Attractive kitchens and baths fully outfitted with popular features will not only help sell your home faster, they also can drive the price a buyer is willing to pay for your home.

Extra space in the right place offers a high rate of return since existing homes tend to lack the roominess of new homes. New family rooms, larger master bedroom suites and eat-in kitchens are all examples of high-value spaces.

Although it is difficult to put an exact price on the resale value of a particular remodeling project, for most of us the real value of remodeling is the comfort and pleasure it adds to the years we spend living in our home.