Throw
your preconceived notions out the window. If you’re hoping to read this
post and come away from it excited about all of the money you’re going
to make after you renovate your bathroom and sell your house, then you
might want to try back another day. Because, in our current housing
market, it will take years for you to see that money back, if at all.Kind of pessimistic, huh? But the truth of the matter is, it’s hard to find a project that is going to actually yield more profit than it costs to do. For example, let’s say you put an addition on your home. That will probably gain you back approximately 35% of what you spent to do it. And in the current economy, home values have decreased, but building materials are on the rise. It costs way more to build a house than to buy one these days.
So Why Renovate at All?
Truth is, people that hire HA Construction usually do so because they want to stay in their home, not because they’re wanting to sell. They like their house, the neighborhood, the schools. They want their house to meet a particular lifestyle, want to avoid the costs of moving, or simply can’t find a home they like more than the one they’re already in.
But, if you’re really needing to make some renovations and the return on your investment is a factor you’re not willing to push to the sidelines, there are a few options that have a better return than others. And it all depends on how you approach it.
Dollar for Dollar
One way of approaching the return on an investment is by comparing the actual dollar value of the renovation. For example, when you add a privacy fence to a yard that didn’t previously have one, you’ve just increased the value of your home by an average of $5,000. Additional renovations that will increase the value of your home include:
- Upgrading laminate countertops to a solid surface, like granite
- Adding a third car garage
- Building a shed or shop in the back
- Expanding or adding a deck, sunroom or covered patio
- Updating your kitchen and/or bathroom
- Fresh paint on all the walls, doors and trim (inside and out)
- New door and cabinet hardware
- New light fixtures
- Exterior landscaping for curb appeal
- Flooring upgrades (steer clear of laminate and cheap carpet though)
Keep in mind, however, that, while these and other renovations may increase the value of your home, it may cost more to do them than the value they add. And it may take up to ten years to see a 100% return on your investment, if that kind of return is even possible. It’s simply the nature of the beast.
Desirability Out-Matches Price
There are several things you can do to your home that will increase the desirability, but fail to increase the value. To clarify, let’s look at two homes, both listed for $130,000. The first home is about 2,000 square feet and has an ‘80s vibe, with outdated kitchen cabinetry, carpet that needs replacing, and oddly colored bathroom fixtures. The second home – your home – is approximately 1,700 square feet, but you’ve invested in updating every room the house. You slapped a fresh coat of paint on every wall, upgraded the light fixtures, added molding to all the rooms, etc. When Joe and Sally Smith start looking for a home within their $130,000 budget, which do you think they’re going to choose: the fixer-upper that they don’t have the funds to fix, or yours that is move-in ready?
No brainer.
The Only Real Way to Make a Profit…
… is to leave HA Construction out of the equation. In order to see a return on your investment, your investment must be absolutely minimal, which means you’re going to have to do all the work yourself. Or, you’re going to have to find subcontractors that you can afford, and they’re hard to find because they can’t afford to advertise and they have no overhead – which means you’ll have to pay most of your budget up front to cover materials. And their lack of experience isn't always to your benefit. Not to mention, it takes a lot longer for you or a newbie contractor to do the job than an established company. Basically, getting a return on your investment means that you run the risk of it not getting done the right way.
HA Construction has never been hired to help flip a home or work on an investment home. We’ve never even performed maintenance on apartments. These jobs simply don’t have the budget available. What Andy and his team are hired for are new builds and renovations for people looking to make a house their forever home. They expect projects to be done correctly, in a timely manner and made to last. And hey, if they get a return on that investment someday, then that’s simply an added bonus.
