Return on Investment
What you should and shouldn’t invest in if you are thinking of selling
If you’re into renovation projects, then updating and revamping your home can be a lot of fun. But before you get too excited about knocking down walls you might want to consider resale value. Flashy renovations don’t always yield the best returns, so you’ll need to take care when picking projects.
Remodels to Avoid
A wine cellar, sauna, or even a movie theater won’t often recoup the high building costs as they are very ‘taste specific’. Luxury add-on rooms are hard to pitch to buyers unless you’re living in an upscale area with large square footage. Most ‘average buyers’ would rather have an extra bedroom, a bigger kitchen or a home office. Furthermore, rooms that depend heavily on wired electronics, like home theaters, are hard to keep current because TVs and speakers are constantly advancing.
The cost of building a pool is seldom fully recovered once the home is sold. It’s widely accepted throughout the industry that a homeowner will not gain additional money by adding a swimming pool. Some homebuyers don’t want to deal with the maintenance cost of a pool which can be costly in electricity, cleaning and chemicals. There are also added insurance premiums, and—if young children are involved, safety issues.
Changes Way Above the Neighborhood Houses
Location is everything and it is always better to be on the lower value end of homes in your neighborhood, as most home buyers will see improvements that could be done that will enhance the home’s value. However, if you do $200,000 worth of renovations in a neighborhood, where the average house is selling for $600k, unfortunately it won’t necessarily make your home automatically worth $800,000. Likewise, knocking down the walls of extra bedrooms for an open layout might not be appealing in a family-oriented neighborhood.
Remodels that Pay
An overall landscape upgrade should provide 100% return or more on investment.
Said to be the heart of the home, the kitchen deserves some extra attention if you’re hoping to sell. That doesn’t necessarily mean making a complete overhaul, but could include refacing cabinets or updating finishes. Keep colors neutral and current, replace hardware with something modern.
The bathroom is another prime place for renovations. You may choose to replace the vanity, faucets, lighting and toilet. This can be an inexpensive way to dramatically improve the look and feel of the room. Completely renovating, or adding a bathroom doesn’t always have the best return. However, it may be essential to making a sale. If adding a bathroom is out of your budget, get planning permission in principle to add one on. This makes it easier for the buyers to imagine what it will look like, where it might go, and how much it might cost.
Replacing old windows can brighten a room. Concentrate on kitchen and living areas where you are likely to need the most light. Be careful as placement of old windows can sometimes be improved upon. i.e. one large double window, instead of two single ones which dictate where furniture is placed.
More Square Footage
Refinishing a basement or providing a pull down ladder for the attic, can dramatically boost the value of a house. Everybody loves storage, to spend a few thousand dollars finishing an additional space, really makes sense.
It’s hard to calculate the return on investment for a coat of paint, but buyers like clean lines and airy spaces. If there is any way you can bring light in, it’s going to affect your price. For those on a tight budget, fresh paint can go a long way to brightening a room.
Keep it Light and Neutral
Even if you’re not considering selling your home just yet, keep potential selling benefits in mind. Intrepid homeowners know that the best remodels will increase both quality of life and listing price, so take care to invest in projects that not only your family will enjoy, but will provide good returns or profits in the future.
Heather Chilvers is amongst Coldwell Banker Bermuda Realty’s Leading Sales Agents. She has nearly 30 years, experience in Real Estate. Follow ‘Heather Realtor Bermuda’ on Facebook, and ‘@heatherrealtorbermuda’ on Instagram.
If you have a question for Heather, please contact her at email@example.com or 332-1793. All questions will be treated confidentially.