Home Renovations Without Wrecking Your Budget

Dated: 05/29/2018

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These remodeling do's and don'ts could help you make the most of your home -- and potentially even increase its resale value

HAVE ALL THOSE HOME IMPROVEMENT SHOWS got you thinking about renovating your kitchen, or knocking down some walls and expanding your living room? You’re not alone. In fact, in 2017, homeowners will spend an estimated $317 billion on home improvements and repairs, up 6.7% over last year. Their motivations are generally twofold: to make their lives a little nicer by enhancing the space they live in, and to protect their home’s value.

In addition, homeowners are frequently more willing—and able—to tap their residence’s equity with housing prices rising. And the right kind of home renovation can help make your home worth more. But it’s worth keeping in mind that even a moderately ambitious renovation project can be expensive and time consuming.

Before you start researching contractors and picking out paint colors, make sure your time and money will be well spent and that your project will add to your home’s value — not just your stress level. Here are a few do’s and don’ts to consider.

Renovate or not?
First, check out comparable homes in your area. Would your home suffer by comparison if you put it up for sale? How many bathrooms and bedrooms do they have, on average? Do most have gourmet kitchens and finished basements? If you decide you want — or need — to keep up with the Joneses, then do a little research to see how likely it is that you’ll be able to recoup the cost of your proposed renovation when you sell your home. (The chart below can help.) How much would it matter to you if you couldn’t eventually recoup those costs?

Don’t price yourself out of the market. As you think about your proposed renovations, also keep in mind that there’s a risk that you’ll make your home more difficult to sell by adding too much to its value.

Putting in that gourmet kitchen might make your house the most expensive on your block if you try to recoup the cost when you sell. Even expensive renovations don’t always make up for their costs when you put your home on the market. According to Remodeling 2017 Cost vs. Value Report for instance, you are likely to recapture only 65.3% of what you spend on a major kitchen remodel.2

Do stay open to the possibility of moving to a new home as an alternative. If, after pricing out your renovation options, you find that the cost — and inconvenience — outweigh the gains, you might consider looking for a house that already has the amenities you want.

Decided to go ahead? Now, how will you pay for the renovation?
With any renovation project, it’s easy to get caught up in the fun decisions — selecting your fixtures, appliances, colors and décor. But before you get too carried away, make sure your finances are in order.

Don’t start without a budget. A ballpark figure isn’t quite enough — it’s important to establish exactly how much you’re willing to spend. There’s an all-too-common phenomenon known as “scope creep,” in which you add a little of this and a little of that, and before you know it your budget is blown. Knowing (and sticking to) your number will help you determine early on what you can afford — and help prevent disappointment and financial stress later.

Do research financing options. If you’re not paying for your renovation with the cash you’ve saved, you’ll need to borrow money. A home equity line of credit may be an attractive option, allowing to you pay your expenses as they come up. If you have enough equity in your home and your current mortgage interest rate is higher than rates for a new mortgage, you might also consider a cash-out refinance. If you don’t want to borrow against your home, investigate traditional bank loans or credit card promotions, including limited-time, 0% APR financing or reward programs that offer cash back.

How’s your money best spent?
What’s a better use of home improvement dollars — updating a serviceable but somewhat tired kitchen or replacing a houseful of old, drafty windows? When you eventually sell, potential buyers may love a new kitchen, but they’re likely to balk at glaring structural issues.

Don’t underestimate the value of quality structural upgrades. Investing in redoing your siding may not be as sexy as adding a master bedroom suite, but it can be attractive when it comes time to sell. According to Remodeling 2017 Cost vs. Value Report, new siding can recoup 76% of the initial cost (on average). Not only does it give your house a visible facelift — it also makes for a warmer, more energy-efficient home.

Do look for smaller projects that add immediate value. Consider replacing your front door with a high-quality door. First impressions matter and it’s the first thing friends, neighbors — and potential buyers — notice when they walk into your house. Rather spend your renovation budget elsewhere? Add a fresh coat of paint to the door and buy a new welcome mat.

Do think about what you may need in the future. Are you planning to stay in your home as you age? Then you might not want your proposed renovation to include additional stairs, or a doorway or hall that might not be easily navigable with a wheelchair or walker. Think instead about things like a shower with seating and an anti-slip coating, or kitchen cabinets with pull-up and pull-down shelves.

About HTR Capital Group:

HTR is an independent company with local roots and national branches through its membership Referral Exchange, a network of over 20K licensed agents in all 50 states. HTR has strong working relationships with area builders, developers, businesses and city/county/state government officials. HTR believes Customers First is a Win-Win situation! No real estate transaction is too large or too small for the HTR team! For more information, visit www.HTRRaleigh.com or contact Gregory Buscher, Realtor® at 919-795-9720 or email [email protected]

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Gregory Buscher

Anyone who knows me will tell you I have never met a stranger. I enjoy getting to know people and helping them however I can. That’s what prompted me to change career paths and become a Licensed R....

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