The 5 best renovations to make with your cobuy group

Renovations that add value

Dream homes are hard to find. Lucky for us, we can renovate. A new kitchen, a new bathroom, an open layout; we probably all have little (or big) changes we’d like to make to our homes. However, the truth is that not all renovations are created equal. Some changes add more value to your property. Apart from the emotional value of a renovation - the financial value it adds to your property varies depending on which room or project you’re undertaking; and, eventually, the cost of a renovation will become larger than the value it adds to your property. Here’s a quick guide to help maximize the value of your renovations.

For a brand new home

So you just bought a brand new home and are itching to start shaping it according to your vision. Let's take a look at which renovations will prove “worth it”.

First and foremost, if this is a home you plan on living in - not flipping at some point - don’t worry so much about added value and let happiness be your guide. This is your home, you’re going to be enjoying it and living in it. However, certain quality of life changes like better energy-saving attic insulation or newer plumbing may add to both the enjoyment of your house and its cost effectiveness. Investments like those are almost always worth it.

If your new property isn’t your new home - if it’s, say, a multi-unit investment of sorts - then those high-end renovations you might be dreaming of are probably not worth the cost. The cost of things like pools or skylights usually outweigh the added value to the property, so be mindful of your intention for your new property when deciding on renovations.

If you’re selling

Sellers should keep in mind that many buyers these days are looking for the perfect turnkey property: a place that’s new, modern, and ready for move-in and a housewarming party right after closing. Use this to your advantage. Confer with your real estate agent at the beginning of the selling process, and get a sense of which, if any, renovations are worth investing in. These are renovations whose added value to the final cost of your home outweigh the cost of implementing them. Remember: when in doubt, lean on a good real estate agent; it’s their job to help.

5 most common renovation regrets

Now that you’ve decided to get the renovation process started, let's take a look at five of the most common mistakes that property owners find themselves making.

1. Not enough planning ahead - You can never be too prepared when it comes to renovations. That’s why planning ahead as much as you can is invaluable. Figure out your plan of action and give yourself more than enough time to accomplish your goals. You can thank yourself later when you’re not panicked for time after inevitable setbacks occur.
2. Not budgeting for the unexpected - Those time setbacks are almost always also financial setbacks. Budget for extra costs down the road to avoid major financial stresses in the future.
3. Get your quotes in writing - Make sure you have physical evidence of your quotes, and make sure you understand them fully. The more you know about where your money is going, the more informed and involved you can be throughout the process.
4. Trying to save costs on labor - You get what you pay for with labor and craftspeople, and when it comes to renovations, you want them done right the first time. Skimping on labor costs can cost both time and money down the road.
5. Not thinking about resale - Although you might’ve bought your home with the intention of living there forever, life has a way of ignoring your plans. You never know where you’ll end up, and when you’ll have to sell your house. Incorporating resale value into your renovation plans is always worth it.

Best renovations for the average home

These are the most valuable renovations for the average three bedroom home.

1. Kitchen - It makes perfect sense that renovating the one room where families spend the most time will add value to your home. The average renovation can cost 10k - 30k, with a 75% return on investments. However, higher-end renovations from 40K and up see a drastic drop to around 40% return in investments. So if you’re prioritizing resale value, don’t bother with high-end renovations.
2. A fresh coat - Painting the interior of your home can cost around 3k - 5k, but you can expect about an 80% return on your investment.
3. Bathroom - Light fixtures, tub/shower, flooring, vanity; a four-piece bathroom remodel might cost 10k - 20k, but the return on your investment can be up to 75%
4. Electric - Upgrading your home to the standard 60-100 amps is around 5k - 6k with a 40% return on your investment
5. Fencing - Buyers - especially families with kids or dogs, or both - place a high value on good outdoor fencing. Expect to spend around $40 per foot on a new fence, and receive a return of 60% on your investment.

Conclusion

The right renovations can dramatically increase the resale value of your home. Prioritizing the kitchen and bathrooms is always a safe bet, but if resale is all you’re interested in, keeping costs low is key in getting the most out of your investments. Though buyers value turnkey purchases, there’s a limit to how much of a premium they’ll be willing to pay.

Nestment, Inc. does not guarantee and is in no way responsible for the accuracy of information provided in this blog post. All information is provided “AS IS” and with all faults. Data presented here may not reflect all real estate activity in the market.  While the information on this site is about legal and tax issues, it is not intended as legal or tax advice or as a substitute for the particularized advice of your own attorney and tax professional.