Home Improvement – How to Maximize Returns on Your Investment
Home improvement is more than just fixing a broken doorknob or repainting your bedroom. It’s a way to upgrade your home for both the enjoyment of living there and the potential for higher resale value when you’re ready to sell. But it’s important to make wise choices when it comes to which projects get the best return on investment. It’s also important to think through how the renovation will impact your life and the lives of anyone else living in your home, including if you want to sell it someday.
About 3 in 5 homeowners (61%) have done home improvement projects since the pandemic began, according to an August NerdWallet survey. And those homeowners spent $6,438, on average, on those projects.
That’s good news for companies like Home Depot, which benefited from the remodel trend during the pandemic as more people stayed at home. But the boom in home improvements may be slowing down as Americans revert to their regular schedules, and that could hurt those who have invested a lot of money into their homes.
The question is, “Are there any ways that homeowners can maximize the returns on their home improvements?”
One way to do so is to invest in projects with high cost recovery, which are those that tend to add more value to your house than what you spend on them. But it’s also a good idea to focus on improving the parts of your home that are most important to you. That could mean creating a dedicated family room or converting a garage into an office. Or, it could be as simple as installing a new front door or replacing old kitchen appliances.
If you’re planning to sell your home someday, consider talking to a real estate agent about which upgrades will have the best resale value. You should also avoid making improvements that will skew too expensive for your neighborhood. For example, a backyard fountain or a new master bathroom with marble flooring might not be appealing to most buyers. Also, don’t overdo the exterior upgrades. Adding a new patio or pool when your neighbors have pretty modest ones can make your home look disproportionately expensive and might deter some buyers.
Another consideration is whether or not the project will require that you temporarily vacate your home during construction. If so, that will impact your quality of life and could even cost you money. So, you should plan accordingly and be sure to have some sort of backup living arrangement for those days.
Lastly, it’s important to avoid going into debt to finance home improvements. You should only take on a project that you’re comfortable paying for with cash, or you should at least be prepared to pay back the loan as soon as possible, so you don’t wind up with a huge balance on your mortgage. And if you’re considering using a home equity line of credit, you should consider the interest rate and monthly payment to make sure it makes financial sense for you.