A guide to making the right home improvements for resale
As the U.S. housing industry continues to emerge from the Great Recession, signs are pointing toward positive recovery. In fact, a recent report from the Joint Center for Housing Studies of Harvard University said the home improvement industry could see record spending in 2015.
News like this may have you contemplating an update to your house. Even if you plan to stay in your home for years to come, it’s important to consider which home remodeling projects offer the potential for a positive return on investment.
The 2015 Remodeling Magazine Cost vs. Value report identifies the following as the top five mid-range exterior home renovations – investments that allow homeowners to recoup a substantial percentage of their investment when they resell their homes:
• Replacing the entryway door with a secure, steel one (101.8 percent)
• Adding manufactured stone veneer (92.2 percent)
• Replacing the garage door (88.4 percent)
• Upgrading painted exteriors to maintenance-free siding, such as vinyl (80.7 percent)
• Adding a wood or composite deck (80.5 percent)
The higher the percentage, the more of the job costs the homeowner is likely to recoup when the home is sold.
Once you’ve decided which replacement and remodeling projects offer the best return on investment, it’a equally important to develop a schedule and budget to ensure that each makeover remains financially sound. Generally, renovation costs should not exceed 30 percent of a home’s value and should be consistent with neighborhood housing trends.
When developing a budget, consider these likely-to-occur expenses:
• Contractor costs. These include labor and may incorporate employee benefits, professional fees, permit and inspection charges and, of course, profit. Get at least three contractor estimates to ensure the contractor selected is cost-effective and reputable.
• DIY costs. If you plan to forgo a contractor, keep in mind that there may be power tools and equipment needed that can be costly to buy or rent. Also, DIY renovations often require expertise that you may not have. Not having the knowledge to safely complete a project or failing to complete a project to code can have serious and costly consequences as can unwittingly failing to file for the proper permits and inspections.
• Hidden costs. For example, bringing outdated electrical or plumbing installations to code, or removing lead paint.
• Site preparation costs. For exterior renovations, this may include tree trimming, clearing land, and renting a haul-away container.
• Interim housing costs. If you must relocate during the renovation then there will be living expenses during the project.
• Material costs. These include large expenses (siding, stone veneer, windows) and small ones (nails, trim) and could account for as much as to 75 percent of the total cost. Be sure to factor in an extra 6 to 10 percent for waste materials that are cut and fitted or damaged during the project.
If interested in near-term resale value, it is important to make sure that selling your home will at least recoup the cost of any completed projects. However, if you plan to stay in your home for many years, you also will enjoy the improved comfort and curb appeal of your home in the meantime.
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