Home renovations are a great way for you to both increase the functionality of your home, and enhance the beauty of your home. When you select the right project to enhance your living space, you can pass on a large part of the expenditure to the future owners of your home through increased property values. Remodeling is a way to boost your return on investment. Items such as decks, window replacements, kitchen and bathroom upgrades are the most popular renovations that offer the greatest return on investment.
What to Consider Before Undergoing Renovations
The return on investment (ROI) of any project is dependent on the local market characteristics, what the condition of the real estate market surrounding your property is, and the quality of the work being done. Upgrading and replacing windows offer the greatest return on your investment regardless of the property market or location of your home. You must consider the reasoning behind your remodeling project. If it is not correcting a structural issue or design flaw, you’re not likely to earn more back than the cost of your construction. However, sometimes cost recovery is not as important as the added enjoyment of increased functionality and beauty of your home.
If you’re an investor remodeling your rental property, the goal is to recover the cost through increased sale price or rental rates. Caution should be used to make sure the project you’re paying for will be renovations that future renters or buyers are willing to pay for.
Location, Location, Location
Your property’s location is a vital consideration. Your renovations should be appropriate for the type of residence and the local property area. Identify comparable homes within your property’s market to make sure you’re not making the mistake of upgrading your home well above average for similar homes within your area. Buyers are seeking homes in areas that offer added convenience, such as shops, schools systems, and of course homes that are within their price range. So even though you may make improvements that outshine the homes around you, you’re unlikely to make a desirable profit and buyers may even seek other properties because they’re at a better price-point.
Geography will also have an influence on the quickest or greatest payback from projects. For example, the maintenance time and cost of in-ground swimming pools make it extremely difficult to recover the cost of installation, and in some cases they reduce the overall value of your home. However, this may not be the case in the southern regions of the U.S., where they experience longer seasons of extremely hot weather therefore making swimming pools a valuable and sought out addition for your property.
Consider Effects of Time
Time is an additional factor to consider as it will also have an impact on your renovation’s ability to boost property values. Structural or design improvements, such as building an addition or completing unfinished space, can add value for a greater amount of time when compared to renovating kitchens and bathrooms or making technological improvements such as adding a new air conditioning system. Upgrades such as kitchens and bathrooms will decline with time as trends change, and HVAC systems will at some point approach their end of life and need to be repaired or even replaced again.
Project Returns on Investment
The decisive reason to undergo any renovation project is the enjoyment you receive from the upgrades you make to your home. This includes both the enjoyment of a more functional and appealing space as well as the previously discussed benefits of putting money back in your pocket down the road. There are a variety of resources available that offer insight when you’re in the early stages of planning your renovations.
The bottom line is, that you should be aware of the costs versus the values they offer. If your end goal is to sell your home within the foreseeable future, you will need to be more sensitive to your ability to recover from the cost of your renovation. Not looking to sell or rent, but just looking to enjoy increasing your home’s beauty and functionality, you’re likely to not stress as much over the return on your investment. Whatever your desire is, Cavalier Builders is here to help. Contact us today to get started on your home renovation project in Los Angeles and surrounding areas.