I recently heard someone say, “If something is free, you are the product.” Which, in most contexts, is probably true. But when it comes to home renovations? If you invest wisely, they should pay for themselves.
No one likes to talk about home renovations (unless they’re plotting at 3 AM—then anything goes). I think we’re all still trying to recover from the Pinterest craze of the 2010s. We really thought we could take power tools to our kitchens and come out on the other side without a scratch (and with new cabinets to boot!).
Those were some dark days, my friends. I have a storage bin full of unopened products to prove it.
But home renovations don’t have to be that way. In fact, if you play your cards right, they should be very straightforward and, ultimately, affordable.
For instance, adding square footage to your house is a foolproof way to increase its value. Many homeowners overlook this option because it’s not always as sexy as a luxury kitchen or master bath remodel. But as a realtor, I know this to be true: Any time you’re adding square footage to a house, specifically a bedroom or bathroom, it’s usually a sound investment. This comes down to basic math.
Homes here in Lincoln County typically sell for about $200-$300 per square foot, but the current cost of renovation is about $200 per square foot. (Of course, these numbers are approximate. The specific finishings you choose will always affect the numbers, but this gives you a general idea of the cost of expansion.) That means adding an extra 400 square feet to your home would cost about $80,000… but could add as much as $120,000 to the value of your home! This is especially true if you’re going from two to three bedrooms or from three to four bedrooms. The more bedrooms you have (up to four), the higher the demand.
If you’re bound and determined to tackle your kitchen, there’s a way to make that pay for itself, too. If your finishes and appliances are outdated, modernizing your space is sure to add value to your home. But that’s the key; if you’re demolishing a perfectly good kitchen that just isn’t your style, you’re probably not going to “get your money out” of the project.
That being said, if you bought a fixer-upper with a kitchen that’s 25 years old and you spend $50,000 updating that kitchen, in almost every instance, your home’s value probably increases by $50,000. If your property was dated compared to similar homes on your street, bringing your house up to the “neighborhood standard” is almost always a good investment.
The same goes for your master bath remodel. If you demo a perfectly good bathroom that’s just not your style, you won’t add value to your house. You may like that new bathroom more, which is always nice, but it won’t necessarily pay for itself. Focus on making upgrades versus cosmetic changes.
In case none of these projects are speaking your language, I want to throw in a bonus tip #4. If done right (and this is a big IF), investing in tasteful landscaping almost always returns its cost. Frankly, it doesn’t take much money to buy fresh flowers, plants, mulch, or even minor exterior updates like fresh paint, new siding, or new shutters. This is the first thing a buyer sees when they walk up to your house (and the same is true of an appraiser if you’re looking to refinance). This category is all about small investments, so don’t go overboard if you want to see a return.
I’ll finish by saying this: ANY renovation is a good renovation if you have the money to pay for it and it makes you happy. You don’t always have to view your home as an “investment” whose sole purpose is to make you money. Your home should also make you happy! Sometimes, that means spending money on projects even if they don’t have a great financial return.
When you go on a date with your spouse or buy Christmas presents for your kids, you don’t think in terms of ROI. You just do it because it makes you smile! Your house can be the same way. But if you want to make sure your renovation projects are as closely aligned with your financial goals as possible, hopefully, these ideas help.
Your Pinterest days may be behind you, but don’t give up on the home renovations that truly matter. Your future self (and your future self’s wallet) will thank you.