You finally have the time and money to tackle the remodeling projects you have always wanted to do to improve your home — but is that a good investment for your money? Not all remodels will actually increase the value of your home. Even those that do, may not pay back as much as you invest. How to decide?
First, if you intend to live in the home for awhile, your criteria should be different than if you anticipate selling in a few years. If you've always dreamed of having a pool for exercise or entertaining, then fulfill your dream and enjoy it. Just realize that when or if it does come time to sell, some potential buyers will see a pool as a liability more than a feature. Some don't want the hassle or expense of keeping a pool clean. Some worry about being responsible for possible accidents. Or some may have small children in the house.
"It doesn't create that much added value unless it's a real high-end property with a really elegant pool," says Ginger Casto, realtor with Western Country Realty of Jacksonville. Therefore, a pool cannot really be considered an investment because the chances of recouping the money you put into it are slim.
The value of other remodeling projects depends on the type of home and neighborhood — is it medium-priced, or high-end? Realtors and remodelers say you never want to be the most expensive home in your neighborhood — buyers would rather upgrade to a better neighborhood.
Realtor James Ward, a former remodeling contractor now with Western Country Realty of Jacksonville, says another mistake is remodeling a garage into a bonus room or extra bedroom. "What happens is you end up with increased square footage, yet most people would rather have a garage. If you really need the extra room, then at least leave the garage door, so it is easy to convert back."
Appraiser Irlene Rohlf of Rogue Appraisers in Central Point says oversized RV garages also don't pay back the thousands they cost. "They are real expensive to build but you have to hope the buyer will need one, otherwise it just doesn't appeal to most people, so they don't add much value," she says.
Media rooms are another iffy proposition. Though they are definitely trendy, they are very expensive with their built-in speakers and electronic systems and may not hold their value. Also, electronic equipment tends to become outdated quickly. A very high-end, large home might recoup this investment, but most buyers aren't necessarily looking for this.
But kitchen and bath remodels always are a good idea, right? Not necessarily. Again, upgrading to all the currently trendy features might not pay off. You definitely want the kitchen to look new and clean and bright, but whether or not investing in granite countertops will pay off down the road is anybody's guess. And forget getting your money back from that nifty built-in espresso machine. "The remodel might be everything you want but the next person might not like the counters or floors," Ward says.
"Lower-end houses that put in hardwood floors and granite counters just will not see the return on the investment," says Rohlf. "People need to match their surrounding neighborhood. Nor will they get their money back from high-end appliances. Jetted tubs in average home bathrooms are also not going to pay."
"Kitchens and bathrooms can be black holes," Casto agrees. "You can easily go nuts when confronted with all the choices. Things can start adding up fast, and soon you've spent a whole ton of money. You really need to avoid the trendy and go for the simple and classy choices. The simpler the remodel the better — you want people to be able to visualize themselves and their things fitting in the room. The more complicated and artsy you get in a remodel the less you'll get back on your investment. "
So, if remodeling for your own use, do what makes you happy. But if you want to spend money that will increase the value of the home when you go to sell, be aware of your neighborhood and go with neutral and classy that can be adapted to a wide range of styles.