Sell vs Renovate
When doing renovations, people rarely think about long-term resale value. Most families want a lovely place to live, and they work to create theirs forever home. However, life can be unpredictable. So while it is joyful to make a dream home, those dreams must be balanced with an understanding of whether or not those granite countertops or that second story are suitable investments in the long run.
What is resale value?
We hear the idea of resale value quite often about real estate. The idea is to buy a property that is a good investment and to have its value appreciated. Good maintenance and appropriate renovations help ensure that when it comes time to sell again, the property has gained equity, and you’ll make money. However, your money depends on market appreciation, so improvements are essential to fit the property and the neighborhood.
Location is the critical factor to consider
If you’ve bought a property by a highway or another not-so-great location, you probably got it for a reasonable price. If that location’s value doesn’t increase when you own it, you’ll probably have to sell it for a similarly affordable price, even if you’ve done a lot of work on it. Many property owners invest in renovations that aren’t in keeping with the neighborhood. As a result, they end up selling for less than they invested, which can be heartbreaking.
Before you renovate, look at what has been selling around you – at what cost for what quality? If the most expensive home in your neighborhood sold for $400,000 after being completely renovated, it doesn’t make sense to style your house to a value any higher. And really, how special are those $10-per-square-foot tiles anyway? Go with the $5.00 tiles instead.
Focus your investment on one or two elements per room. Make pricey items such as granite countertops, a fancy backsplash, or a higher-end faucet; work like show pieces, similar to a piece of art. The smallest may be best when it comes to resale. As for adding a second story to create more space for an expanding family, it may be worth it, in the long run, to hunt for a bigger home.
You may never recover that entire investment if you invest an extra $100,000 on a two-bedroom bungalow in a neighborhood full of two-bedroom houses. It may be better to take your equity and find a larger home in an area where your investment will hold and grow in time. Regarding resale value, it’s always better to have the most miniature house in a room with mansions rather than a $600K house surrounded by $300K.
Of course, creating a joyful home should always be the priority. Just make wise decisions that will bring you prosperity and happiness for years.