Home Improvements That Pay Off

We pour billions and billions of dollars into home improvements each year, but will we ever see a return on our costly investments? According to the Remodeling magazine’s annual Cost vs. Value Report, we find that the majority of these expensive projects yield very few returns.

Most people remodel their homes for two reasons—a) to either increase the value of their home and/or b) to enhance their quality of living. Therefore, before tackling your next project, ask yourself, what are my reasons for doing this? Although a fireplace in the master suite sounds divine, will it produce a profit down the road? If your reasoning for the project is to solely enhance your quality of life, then by all means, do what your heart desires. However, if receiving a return on your investment is top priority, then you might want to give your future endeavor a bit more thought and rationalization.

Our team of Houston mortgage experts knows that several factors dictate the amount of profits made on home renovations. Below you will find a list of guidelines that will help you determine what home improvements will generate the most profit.

Keep up with your neighbors, but don’t out do them.

Although it sounds tempting, upping your neighbors can be an expensive mistake. Your best bet is to choose projects that make the value of your home comparable to others in the neighborhood. Take some time to think about what the other houses are like in your area. If the majority of the houses in your neighborhood have three bedrooms and two bathrooms, but your house only has two bedrooms with one bathroom, then adding an extra bedroom and bath will make a huge difference in the value of your home.

It is important to know that the opposite effect could happen as well. Let’s say the majority of houses in your area have two bedrooms and one-and-a-half bathrooms. If you choose to add on a master suite to your existing home, you may find yourself unable to recoup the total cost of the project.

Modesty is the best policy.

If profit is the main objective for renovating your home, less is more. Kitchen and bathroom upgrades will typically offer nice returns. However, redesigning the entire footprint of the first floor of your home may not generate the significant return you had hoped for. Again, if receiving a high return on your investment is top priority, renovations that keep you in the neighborhood averages are far better than monster makeovers.

Where will you be in five years?

Before beginning any renovation projects, think about where you will be in the next five years. If you see yourself in the same home, more “personalized projects” are okay. After all, you will be the one living in the home long-term. Now if you suspect that you will move to another city, or into a larger house in less than five years, investing in projects to compete with neighborhood values is extremely important. Lastly, remember not to overextend yourself financially. Think about your financial situation now and in the future. Your goal for home renovations should be to improve your home, not lose it.

Highest paying home improvements:

  1. Kitchens and bathrooms – These two areas remain at the top of the home improvement list. They are usually the most expensive rooms to remodel; therefore, they are the most preferred by homebuyers.

  3. Don’t neglect the rest of the house – A modern kitchen with stainless steel, energy efficient appli ances is a nice to have, but not a need to have. If the rest of your house if filled with shag carpet, popcorn ceilings and cracked foundation, the money spent on the kitchen is essentially wasted.

  5. Paint can change everything – Perhaps the most inexpensive and easiest way to renovate your home is with a fresh coat of paint. For just a small amount of money, paint will breathe new life into a room and give it that cleaner, newer feel.

  7. Avoid too much customization – You want buyers to envision themselves in your home. Having too much customization could leave them feeling as though they are trying to fit a square peg into a round hole.

  9. First impressions are key – Curb appeal is huge. Make sure that the house’s siding, paint and land scaping look acceptable. After all, homebuyers generally make up their mind about a home within the first 30 seconds of seeing it.

This article was brought to you by the mortgage experts at Houston Mortgage Texas. If you have any further questions regarding the mortgage products we offer, please do not hesitate to contact us.

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