Small renovations to your home can pack a big punch. Big renovations can also pack a big punch - but they can also be a big headache and come at a big cost. While you may be eyeing a new bonus room and guest bedroom in the attic, beware that not every renovation pays you back at the same rate.
"Homeowners in many areas of the United States can still recoup 80 to 90 percent of the money spent on home improvements," said MSN Money. "The key is to know where to spend. Just because you put $20,000 into renovations, it won't necessarily add that much value. The key to adding value is to focus on the things that are important to buyers, and to not over-improve. You don't want to have the most expensive house on the block. So if the houses in your neighborhood have concrete driveways, investing in expensive brick pavers may not be in your best interest financially."
It is also important to consider your lifestyle, so that you make smart changes according to your desired outcome, said CBS News. "Home remodeling is all about return on investment. When deciding which project to tackle in your house, consider your circumstances. If you're planning on staying forever, make changes to the space that makes it more livable for you. Just remember not to go so overboard that you can never sell the house if you suddenly needed to. If your current place is not your forever home, only invest time and energy into projects that will give you a decent return when you eventually sell it."
Here are some tips for making smart renovations that can bring enjoyment of your home and also make you money.
How much should you spend?
The easy answer is to determine what you're comfortable with budget-wise and then bump that amount up against home values in your area and the latest numbers defining ROI for your project. Remodeling magazine releases a cost versus value report every year. You can read the 2013 version here.
"The biggest mistake homeowners make is spending more on the remodeling project than their home value can support. Don't expect to get optimum return on a $65,000 kitchen if the home is valued at $300,000," said HGTV. Generally speaking, you can spend between 6 and 10 percent of the total home value and get fair returns. You also can be too thrifty and overlook items that buyers look for in your price range.
"Remodeling for resale means choosing materials that appeal to the masses. This means opting for stainless steel appliances that are high quality rather than professional-grade models. Spend on functional features like pantry drawers, soft close cabinet drawers and doors, waste-recycling cabinetry. But don't over-personalize the space. You may appreciate the art-deco drawer pulls that cost $50 a pop, but will buyers care? Probably not.
Before you consider an exterior renovation, take a good look at your home's exterior with fresh eyes. Is the paint peeling? Is the lawn dead? "If your house doesn't look appealing from the outside, chances are a potential buyer will never make it inside," said TLC. "According to Bankrate.com, a good first impression can add five to 10 percent to the value of your home. If the exterior color of your house is dated or fading, painting is a good place to start your improvements. Choose colors and exterior details that match the period of your house."
If it's landscaping you need, re-seeding your lawn costs a fraction of putting down new sod, but takes longer to bear fruit. If you just need a quick fix before an Open House, head to a home improvement store for some potted flowers to place at either side of the door or along your front walkway. The splash of color brightens up a house and can turn drab to dreamy.
An important, but often overlooked, renovation is the front door. In fact, replacing a "low-quality entry door with a steel version will give you the biggest bang for your buck." According to Remodeling's Cost vs. Value report as reported by Forbes, "homeowners can expect an 85.6 percent return on investment, or $856 on a $1,000 job."
No. 2 on their list will give you some enjoyment out of your space while also providing you a great return on your investment when it's time to sell: add a deck. And make sure you do it professionally.
"This is definitely not a DIY job, since a poorly constructed deck could end up costing you big money in the long run," said CBS News. "Have a pro install a nice wooden deck, however, and you could see a 77.3 percent return on your investment. That's more than $7,730 on a $10,000 job.
If you are thinking about adding a deck yourself and you don't have neither the skills not the experience, make sure you check out HGTV's Top 25 Biggest Renovating Mistakes.
A New Coat
Once you have taken stock of your exterior, it's time to take a look around the inside. Outside of picking up your stuff and de-cluttering the home, painting is probably the easiest change you can make for the lowest cost and biggest impact. "Painting is one of the least expensive ways to freshen and improve your home's look, and consequently its value," said TLC.
Are all your walls white? You can add a little personality without going overboard just by splashing some neutral paint on the walls. Are the colors too bold or to personal for potential buyers? Toning it down will help buyers see the home, and not get lost in the cobalt blue walls. In addition to the walls, "A coat of paint can do wonders to brighten up dingy cupboards, for example, or old paneling," said TLC.
Yes, paint can indeed provide an easy update in a kitchen. If you have old cabinetry and it's not cost-effective to change it out, a coat of paint can give you a great head start and turn around potential buyers that would have been turned off by all that outdated mid-range maple.
"For potential buyers, the kitchen is the room that can make or break the sale. An upgraded, attractive kitchen can make your home irresistible. Ideally, your kitchen renovation should earn a 70 percent return on investment when you sell your home, said HGTV. "But this depends on the features you choose, how much you spend remodeling and whether your priority is to create a dream kitchen for yourself or a kitchen that will appeal to potential buyers. The biggest mistake homeowners make is spending more on the remodeling project than their home value can support. Don't expect to get optimum return on a $65,000 kitchen if the home is valued at $300,000."
Of course, if your kitchen looks like this, be prepared to spend a dime or two.
Kitchen remodels remain a top choice of homeowners - both those who are looking to sell and those who just want to improve the aesthetic or function of their home.
"Over the last five years, nearly four in ten home improvement dollars have gone into kitchens and future spending is likely to follow the same trend, according to a recent survey by Houzz," said Huffington Post. "U.S. homeowners on average spent $28,030 to remodel their kitchens over the last five years, with costs varying widely at different budget levels. Nationwide, the average cost for a high-end kitchen was $54,942, $22,390 for a mid-range kitchen, and $7,133 for a lower-budget kitchen."
For more reno dos and don'ts, see Life Hacker's guide to the renovations that raise your value - and the ones that don't.
A recent story about home renovation projects from the Chicago Tribune found that "the average small bathroom home renovation cost is a little under $16,000. However, you'd only expect to see a payback of a little over $10,200 on that project if you turned around and sold your home within a year of completing the project.
That's not to say that a well-thought-out and executed bathroom reno won't pay off for you. Kitchen and bathroom remodels continue to be two of the best investments you can make in your house," said HGTV. "They're always right up there at the top of the list. They're the big, sexy rooms that new home builders splurge on, so when buyers are shopping around that's what they want in an existing home, too."
If your bathroom looks like this, by all means, go for the gut job. There are resources out there that can help you work around ugly tile, like in this video, but some bathrooms are just beyond an easy fix.
If you're considering a bathroom renovation, Better Homes and Gardens recommends:
- "White sinks, tubs, and toilets all cost less than those in colorsbecause manufacturers make and sell more of them." Updated vanities and tubs can fetch a near 100% ROI, said Yahoo.
- Skimp on high-cost items like tile, buying only enough to tile "only the shower and/or bath area walls. If it's within your budget, tile halfway up the wall, add a border design, and paint the area above."
- Update the cabinet Hardware "to provide an instant visual impact at a minimal cost"
- Trendy Tile
If you love the look of pricey hand-painted or mosaic tile but you're on a budget, include a few... among affordable field tiles.
Or, use your accent tile in a unique design, like in this bathroom, which allows you to create a modern, inviting look without the high cost.
You can see some more ideas for low-cost bathroom renovation ideas here.