If you think spending $30,000 on a home remodeling project will increase the value of your home by $30,000, stop now before you spend a dime. The money you spend on a remodel rarely increases the value of your home dollar for dollar. Before you start spending, find out what types of remodeling projects add value to your home, how much remodeling projects add to your home’s value and how to plan an efficient and cost effective remodeling project.
Types of Remodels that Add Value
The primary way to add value to your home is to add square footage. When you add rooms, floors, finished basements or attics, you’re adding living space and value to your home. Another way to add value to your home is to update or renovate existing bathrooms and kitchens.
Renovating a kitchen has an 80 percent return on investment, according to Remodeling magazine. Bathroom renovations return up to 75 percent of the remodeling costs. For example, if you spend $30,000 on kitchen renovations, you will add approximately $24,000 ($30,000 x 80% = $24,000) to the value of your home.
Getting the Most Out of Your Renovations
Now it’s time to be a wise remodeler by planning. Planning should happen before you spend one dollar on materials, labor or anything else. Use this three-step process to plan your remodeling project, save money and maximize the increase of the value of your home.
1. Prioritize. Decide how long you intend on living in the home and then make a list of the remodeling projects you have in mind for transforming it. Prioritize the list, so that the most important projects are at the top. If it is a short-term home, consider upgrades that are appealing to potential buyers, but are low-cost to your budget, such as painting the exterior of the home or replacing the front door. For long-term homes, you can spend more money and consider more intense projects such as kitchen and bathroom remodels.
2. Create a realistic budget. Tackle one home improvement project at a time and create a realistic budget for completing the renovations, upgrades or changes. Experts recommend adding an 15 percent to a budget to build in a cushion for unexpected expenses.
3. Shop and compare. Home renovations of any kind are big-ticket purchases, so it’s smart to shop and compare different options. Obtain at least three bids from contractors or price shop at least three stores when buying appliances and other items.
While you don’t add one dollar of value to your home for every dollar you spend in home improvements, when you make the right improvements, you can add significant value to your home. Once you understand what adds value, be a smart remodeler by setting your priorities, putting together a sensible budget with a built-in cushion and finding the best deal you can.
For more ideas on how to improve your financial health, check out Quizzle.com, where you’ll learn how to achieve your credit potential and get home loan recommendations tailored to your unique situation. And check out these great money-saving articles from the Quizzle Wire:
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