Return on investment is a catch phrase of the money making community. When you’re dealing with your home, certain intrinsic values need to be factored into this equation. You don’t always have to be able to recover the money that you sank into a home improvement project to receive a reasonable return on investment. If your life is improved by what you do to your home, pleasure, convenience, and utility need to be factored into the formula.
If you are planning to flip a house after you’ve lived in it for a couple of years, then all home improvements should be weighed against the impact on resale value and ability. Two questions need to be answered. How much will it add to worth? How much will it improve the chances of a quicker sale?
Almost anything of modest cost done to the exterior of your home to improve how it appears on a buyer’s first impression has a huge impact on both questions. Better lawn quality, improved landscaping, exterior repairs, and painting are almost always money makers. If you can sell quicker, you won’t be as tempted to do price reductions and that means more money too. A new roof is only a factor if the old one was clearly needing replaced.
State-of-the-art windows are another way to wow potential buyers. The addition of a sunroom will usually be profitable. Any upgrades to the bathroom or kitchen that keeps with the character of the house will be bonus money at the time of sale. People like convenience. Keep increasing the convenience factor and resale value climbs.
Any repair work that you do to improve interior cosmetics will enhance the buyer’s opinion of the house relative to the asking price. Very few people jump up and down with enthusiasm at rusty faucets or crooked cabinet doors. On the other hand, to replace a furnace or water heater will rarely be valuable unless the old ones were manifesting obvious issues.
If your plans are to stay in the house for another 5 to 10 years, then home improvements aren’t about monetary returns on investment. The returns you seek are an upgrade to your lifestyle and pleasure. The pool in the back yard rarely increases the value of the home enough to recoup the investment in money. However, that pool will frequently be considered a great investment for your family fun or entertaining calendar.
So, ROI needs to be weighted by where you are heading with the house. Short term is all about money. Long term may have the money involved, but it is more about you and your family. Is it worth it to someone else, or is it worth it to you, respectively? Answer these questions, and your return on investment concerns will be answered also.
