Home improvement, or rehabilitating your house to better fit your lifestyle, is a popular pastime for many homeowners. However, not all projects are a good investment, and it’s important to understand how much a project will add to your home value before deciding whether to tackle it. Using free online tools, you can get an idea of the costs and potential benefits of any given project.
A home is one of the most expensive and largest investments most people will ever make, so it makes sense to want to maximize its resale value. But it’s important to remember that not all renovations will add value to your home, and some might even detract from its resale price.
According to RenoFi, a company that offers financing for home remodeling projects, the average homeowner can expect to receive about a 70 percent return on their investment in home improvements. However, this figure can vary significantly depending on the type of project and your specific circumstances.
A homeowner may use a personal loan to fund some of these projects, although this option usually comes with higher interest rates and requires good to excellent credit. Another alternative is to save up and pay for the improvement in cash. This can reduce your interest charges and can help you stay in control of the project.
Home improvement refers to the repair, painting, refinishing, remodeling, altering, renovating, restoring, modernizing, moving, demolishing, or adding to any residential building. It also includes the construction of nonpermanent structures and the conversion of commercial property to residential use.
There are certain home improvements that are almost always a safe bet for their ability to add value, such as updating an outdated kitchen or bathroom, says real estate broker Benjamin Ross. Other projects that increase livable square footage, such as basement renovations and deck additions, are also typically good bets, Ross says.
Regardless of the type of home improvement you’re considering, it’s crucial to choose a contractor that is licensed and insured. This will ensure that the work is done to a high standard and in compliance with state regulations. It’s also a good idea to get an estimate before beginning any work, and to set up a payment schedule with the contractor that includes an initial down payment and incremental payments until the home improvement is substantially completed.
While it can be tempting to spend thousands of dollars on new fixtures and furniture, you should only do this if you can afford it. Going into debt for a home improvement will only cost you more in the long run, as you’ll have to pay interest on those extra dollars. Lastly, you’ll want to avoid making any renovations that outpace the rest of the neighborhood in your area. Putting in a fancy fountain or a pool that doesn’t suit the local tastes could turn buyers off, reducing your home’s resale value.