By Glen McKenzie
If you’ve lived in North Texas for any length of time, you’ve seen the tremendous growth in this market. In fact, over the last few years, home inventory has been extremely tight. We’ve seen homebuyers, in many cases, searching for a home for well over a year. This has many people “rethinking” a move and deciding to upgrade their existing home.
When you’re making improvements or investing in a remodel to your home, you’re not just making your life better in the short term. You’re also making an investment in your future. Ideally, the increase in the value of your home will exceed the cost of the improvement.
However, it seldom works out like that. It may take years for the appreciation in your home to recoup the expense of an improvement. If you’re looking for an investment, putting your money in a share certificate or other long-term investment option might net you more. When you’re making home improvements, though, you’re looking for ways to improve your quality of life while being as cost effective as possible.
Calculating the return-on-investment (ROI) can be difficult because the data is based on national averages. For instance, in drought-afflicted parts of the country, water-efficient fixtures, rainwater collection facilities, and low-water landscaping will pay long-term dividends. In places with lots of solar exposure and high utility costs, solar panels will make your home more cost-efficient and attractive to buyers. Keeping that in mind, finding out what works for your market therefore depends a lot on trends and local conditions.
There’s some good news if you’re looking for more universal approaches for getting the best increase in value for your home improvement dollar. There’re a few simple rules to follow. Seek relatively low-cost improvements that require little to no maintenance. They should immediately distinguish your house from similar homes and, ideally, they also improve the energy efficiency of your home.
Here are four home remodel projects that can improve the resale value of your home. They’re excellent uses for your home equity line of credit (HELOC) and you may be able to save money by doing part or all of them yourself! By the way, consult your tax adviser to determine if these improvements apply for tax deductions. There’s a reason all of these “fixer upper” type shows are so popular!
1) Replace the front door
There’s an old adage in real estate that suggests the features get tours, but the front porch gets sales. People make decisions on home-buying all the time by starting with a home’s curb appeal and finding reasons to support it later.
Why not start your home remodeling project with the first thing you interact with on your house: the front door. Upgrading an old, poorly-fitting front door with a newer energy-efficient model is a cheap, quick project that can instantly improve your home’s efficiency and aesthetic appeal.
With an average price of over $1,000, including labor, an energy-efficient front door has an ROI of 98%! It’s also a chance to be creative. A new front door can add a splash of color, and window placements can break up a monotonous front profile.
2) Minor kitchen remodels
Replacing major appliances and installing new flooring is a difficult, time-consuming, and expensive task. Being without a kitchen for weeks on end can be a nightmare, and the number of professionals needed to install new lighting and other features is mind-boggling. The national average for spending here is $59,000, and the ROI for major kitchen remodeling isn’t great, at about 70%.
Minor kitchen upgrades, like new cabinets, counter-tops, and energy-efficient cook-tops, are comparatively inexpensive. The average spend here is just under $20,000 with an estimated return on investment at an impressive 81%. Just like with the front door, the changes are mostly aesthetic. People perceive a more modern-looking kitchen as being a better fit than a more “retro” look.
This is also a chance to customize a place where you spend a great amount of time. Think of the kitchen as the “heart of the home.” Having a kitchen laid out just the way you like it can make it easier and more enjoyable to cook. This will encourage you to eat more meals in, and energy-efficient appliances can lower your electric bills for the life of the home.
3) Wooden decks
An outdoor living area is one of the hallmarks of the current iteration of the American dream. Where else can a family sit and relax and spend quality family time? Watch the kids play in the yard while tending the grill on a beautiful wooden deck!
Wooden deck additions were unpopular for years, as consumers see them as luxuries. During a recession, remodeling dollars tend to focus on needs, like kitchen and bedroom updates. Now that the economy is improving, more people are looking at decks as valuable extensions for their living space.
The average cost, based upon a 16-foot by 20-foot wooden deck, is just under $10,000. The average return on investment is about 75%. This is because of the perception of expanded living space at a reasonable price. Adding a deck costs about $35 per square foot, while a square foot of inside space costs an average of $88! Decks are a great way to increase the play space for a modest cost.
In this part of the country, a deck is an improvement that can be utilized for much of the year.
4) Convert an attic space into a bedroom
For most houses, the attic is an afterthought. It’s a place where unused craft projects and abandoned hobbies go to die. Consider turning that dead space into living space with a remodeling project.
Turning an existing attic space into a spare bedroom or office, complete with its own bathroom, can be done for a slightly steeper price. Nationally, the average cost is just over $50,000. That includes constructing a room, extending utilities to it, and adjusting the exterior of the house to accommodate the new space.
This remodel provides a 77% return on investment in resale value, with the potential for more. If you have adult children or relatives visiting from out of town, an attic room can be a wonderful guest room. You could also rent it out for additional income.
If you’re considering these or any improvement to your home, DATCU would love to assist you. We offer all types of home loans including new home purchases, refinances, home equity loans (for any need), and home equity lines of credit. With over eleven (11) branch locations, it would be our pleasure to serve you.
Glen McKenzie, President/CEO of DATCU Credit Union, may be reached at 866-387-8585.