My Personal Finance blog friends may chastise me, but I rent my home. It’s a $450,000 home in San Diego that I rent for $1900 a month. In a tough market. And that $1900 includes landscaping twice month, house cleaning once a month, and the owner covers water/disposal utilities. Not exactly a cheapskate, but not living to the extreme either.
Next door is a house that rents for the mid-2000’s. A steep incline in price you ask me. Why? Well, I am a good tenant and the owner wants to keep me. No joke. He says it’s so hard to find tenants that keep good care of his properties. He’s taking care of his dear mother in Michigan in her old age. He doesn’t plan on moving back here until she passes away and it would be his dream to have me take care of his place until then (not something I’m planning on!).
Here’s the real stakes—the property next door rents out for $600-$700 more per month (without the perks I’m getting!) simply because of nice floors and turf in the back yard (I hate turf by the way, but some people love it because it looks consistent year round). Is that worth the extra $700 a month to me? Absolutely not. If you asked my neighbors, they’d say the same thing.
Here’s the crux of what I’ve been chewing on in response to this realization: how does someone truly increase the value of their home in this market? Of course, renovating your home may do the trick. Here are some projects to consider. And if you do consider this getting a fixed home loan or a renovating loan might help you accomplish that goal.
It’s important to note that many home improvement projects don’t add value to your home, especially in a down market. In fact, some improvements can even detract from the asking price when you decide to sell. On the other hand, some projects can add significant value to your home.
So which home improvement projects should you invest in, and which projects should you avoid? Below are some helpful tips for home improvement projects that increase the value of your home, and home improvement projects to avoid altogether.
Projects to Increase Home Value in This Market
1. Remodeling the Kitchen
The kitchen, for many, is the heart of the home. Because of this, updates to this part of the house pay off. According to HGTV, you can expect to recoup 60%-120% of your investment on a kitchen remodel, as long as you don’t go overboard. Keep it consistent though. Don’t ever make the kitchen fancier than the rest of your house.
Prices run the gamut when it comes to a kitchen remodel. From $5,000 to $75,000 or more. If you’re not looking to burn through your wallet, start here: fresh paint. A new paint job, in modern colors, can go a long ways towards updating the look of your kitchen. And paint is cheap compared to the cost of new appliances.
2. Bathroom Addition
I’m not talking about a bathroom remodel; I’m speaking about an actual addition. How many bathrooms does your home have? If it only has one, adding an additional bathroom can recoup you 80%-130% of whatever you spend.
When I speak of add-ons I don’t encourage you to tack it on to the outside of your home like an outhouse. Take a look at any extra rooms or underutilized spaces. Be creative: Consider other spaces, such as closets or areas under the stairs, too.
3. Reinventing a Room
Adding a room to a house can also be a costly venture. Certainly increasing your square footage can add value to your home. But have you considered reinventing your existing space? You could finish your basement, or convert the attic to a bedroom.
Before you go too far and bring in your demolition crew to tear down walls and rafters, try to think about the ways that you, and potential buyers, can use the space:
- A Versatile room has great appeal for a potential buyer.
- Basements frequently work well as a small apartment for an aging relative, tenant, game room or second living room.
- A lot can be done with attic spaces. They often work well for game and craft rooms. Attic play rooms are great for kids.
4. Adding Energy-Efficient Windows
Buyers today aren’t just shopping today to save money on the price of the home, but to keep their utility costs down. Energy efficiency is en vogue. The investment in energy-saving windows can pay for itself through lowered utility bills. You can also receive a green energy tax credit of 10% for this upgrade, as long as you install Energy Star-rated windows. You might also qualify for additional credits from your state, or even your utility company. Learn more about available offers and rebates in your area by visiting the Energy Star Rebate Finder.
5. Deck Addition
A very popular renovation to add value to your home is adding a deck to your home. Outdoor living spaces have become more desirable, especially since more people are taking “staycations.” If you make your deck and your backyard more appealing, your house will be more appealing to prospective buyers when you decide to sell.
Featured image by http://dribbble.com/ShawNielsen