Recent trends show that home renovation is sweeping the country today. With homeowners and investors alike, this business has become one of the most popular trends this decade. There are many people out there who are confused about what to do and what not to do. Surely, making a part of the home look better is always a plus. However, you can spend a lot of money on renovations that merely make the house prettier and more marketable, but do not actually raise the value of the home. I have had years of experience renovating hundreds of homes and have seen people waste thousands of dollars fixing up houses for resale and can’t get the money they spent on rehab back out of the property when they sell. If you are going to sink a substantial amount of money in a property, make sure it is something that will add value to the structure.
For example, the kitchen is the top one thing that will add value to your deal. More than other renovations, the kitchen has far more of a payback value for the money spent…when you sell. Everybody loves a clean, modern kitchen that has all the latest amenities. A common renovation includes a new stove and oven. It should also include an island piece for prep and serving. New countertops and upgraded cabinets are great too. For big savings on refinishing cabinets, refer back to a recent issue of REIP magazine for my article on GIVING KITCHENS AND BATHROOMS AN INEXPENSIVE FACELIFT.
The second best rehab job as far as paying you back when you sell is the bathrooms. A new toilet, sink and vanity freshen up old bathrooms quite nicely. Don’t forget new flooring and possibly upgrade the tub to a bigger size garden tub. Replace shower curtains with sliding glass doors to add value and appeal. Make sure you have a nice linen storage with plenty of room for towels and accessories. Use soft neutral colors so that it will go with almost any decorating taste.
Interior painting, carpet and décor will bring up resale value faster than water drains downhill. As a relatively inexpensive facelift, paint and carpet are one of the first things that catches a buyers eye. We all know that spouses and partners in the business are keen to the fact that properties are more appealing with fresh clean walls and floors. Adding a little chair rail or some crown molding really accents a room without costing you the farm. And once again, this adds value!!!
Flooring, Additions, Fireplace & Basements
Flooring of any kind when it’s new will make most any room look better. Never put carpet in bathrooms or areas the may become wet on a regular basis. A better way to go would be linoleum or tile for these areas. Then decorate with throw rugs that can be removed and washed.
When doing carpets, don’t overspend as most people do. As I teach in my training camps across the U.S. most people make the mistake of buying a great carpet and a cheap pad. This is exactly opposite of what you want. You want a great pad and you can lessen the quality and cost of the carpet. To get many years of great wear and being able to stand up to cleaning, you should use a 6 to 8 pound pad made of multi-colored specs and cover it with 40 ounce carpet. This is a very nice combination for rental houses and properties you are fixing up for sale.
Room additions are next in line for adding value. Most beneficial if it is added on the main floor, any room addition adds living space and square footage to the home. It can be a Study, office, extra bedroom, adding a bathroom and so forth. Anytime you can add useable space to a property, you are adding value.
Adding a fireplace such as in a den or living room is a popular choice from some of the research I did for this article. As many of you may have noticed, it is not uncommon to see fireplaces in the bedrooms of most new high end homes. Not only does it add a decorative flair, but it’s cozy, romantic, inviting and even warm. Though you may not want to add some additions to you house, pick and choose the one or a few that would work in you situation and use it to raise not only the value, but also the profit figure on the bottom line when you sell.
Renovating the unfinished basement is one of my favorites. Just think how much more appealing a house would be if all that space downstairs was suddenly useable living area. And talk about adding value…The sky is the limit. Think about what someone could do with this space. Well, let’s see. You could move the teenage kids downstairs. You could add bedrooms to the area and a kitchen and have a rental area. It could be an In Law suite. You could turn it into a home theater or you could make it a game room or you could use it as a home office and run a business out of it. You could practically interest a buyer in most of those possibilities listed above, but for Pete’s sake, if you have an unfinished basement…finish it!
Don’t Forget The Exterior
Exterior painting to re sell a property is a must. If you have seen my seminars, you will remember me saying that on rentals and lease options, I pressure clean the outside to see if it looks pretty good with just a good cleaning. I don’t just automatically paint it because that is how others have done it. See, If I am selling outright, there will be someone getting an appraisal on the house. Therefore, I will paint it because it adds value to the appraisal, but if I automatically paint my rental exterior, it does not add monetary value to what I get from my renter or lease op buyer. Instead I will leave the exterior painting for those situations up for a negotiating factor I can use to manipulate the terms or down payment of the clients. See the difference of the added value?
Next are window and door upgrades. This will add value and appeal to almost any home. To get a new look but also save money, leave the frames of the doors (jams) and buy door blanks. Add the new doorknobs and hinges and paint all doors and jams to match. A door blank is much less expensive than a pre-hung door. Also, look into windows that offer savings in heating and air conditioning bills. Over time, in the savings they create in utilities they may just pay for themselves.
The last of these 10 renovations would be the Heating and Air conditioning units of the property. This is where the heat hits the fan! By upgrading and old HVAC setup in a house, you have literally relieved someone’s fear that the unit will fail and need replacing. What’s the most common thing we investors do when selling a house now? We buy a home warranty for a year and offer it with the house so if something goes out in the form of a furnace or A/C unit, then it’s covered and the buyers are more comfortable with that. To help make the decision on how to handle buying a new heating system or A/C unit,
Keep this in mind. The life of a furnace or air unit is about 15 to 17 years on most brand name makers. There is a tag on heat, a/c units and water heaters that tell what year they were made. Seek out this tag and you’ll have a pretty good idea how much longer the unit has before you can expect a problem.
Summing It Up
I hope that this information will shed some light on what renovations will I actually get value out of doing them, as opposed to ones that look pretty, but cost you profit and time, with not much benefit. For more tips on remodeling or learning about real estate investing, please visit my website at PeteYoungs.com