If you have been in your home more than 13 years at least two things are true. First, you have exceeded the average length of time of home ownership of a single property. Second, you have already or will soon need to do some updating to keep increasing your equity.
Home improvement projects have been taxing my mind and wallet lately. We are in the middle of installing new siding and windows at the beach, and about to embark on a kitchen makeover in Portland. If you have been contemplating a project more elaborate than a Sunday trip to Home Depot, here are a few considerations.
JOY OR RESALE?
Some improvement projects simply can’t be avoided, such as replacing 30 year-old cedar siding at the coast! But a client recently asked me whether she should: a) put in a bathroom to an upstairs currently without one, b) build a nice patio, or c) add a master suite on the main floor. Any of these additional features would bring joy to your life, and if you are planning on being in your home a long time then pursuing the project that will make your family the happiest is an easy choice. If you plan to sell your home within a year the choice is also easy: none of the above. Since the return on investment (ROI) is never dollar for dollar on major improvements, conventional wisdom dictates that you should not put yourself through the stress and expense just to put your house on the market.
Most people fall in the “we might sell at some point” category and find themselves balancing short-term happiness and ROI. According to the Remodeling 2018 Cost vs. Value Report (www.costvsvalue.com). Take my client, for example. A bathroom addition in Portland averages $47,320, of which you can recoup $35,019 on resale (ROI = 74%). A patio build costs $55,596 with a ROI of 57%. The new master suite may run $128,332, with a ROI of 70%.
A bathroom upstairs would certainly help sell the house, but until then wouldn’t provide much added value because my client only has a guest room and office upstairs. A new patio would be nice in the summer months, but has the lowest return. The master suite, while the most expensive, has a strong return and would be fabulous for however many years my client keeps the home.
Before taking on a major project let’s go over recent comparable sales in your neighborhood. We can look at factors like sales price per square foot, updating trends, and total numbers of beds and baths. Once you are armed with comp research, your bids and ROI stats, and some guesstimate of how long you will keep the home, you will be ready to pull the trigger on your next home improvement endeavor.
“© 2018 Hanley Wood Media Inc. Complete data from the Remodeling 2018 Cost vs. Value Report can be downloaded free at www.costvsvalue.com.”