The housing market is coming to a head, as consumer confidence has reached a record high and home prices skyrocket in major cities across America. This trend has inadvertently led an uptick in home renovation projects.
Mortgage affordability remains a major reason that many consumers are choosing to renovate their existing home, rather than search for a new one.
If you are one of the millions of Americans thinking about completing a home renovation project this summer, then there’s some considerations you should keep in mind before beginning this project.
Cost is Relative
Despite what you might believe, a home improvement project, such as remodeling your kitchen, will have hidden contingencies that you will have to budget for. Beyond this, contracts can run way beyond the initial timerame and end up costing you more. Remember, a quote is not a price tag and taxes and fees will also drive up costs that you’re unaware of.
In terms of the renovation project, contingencies can range from structural and architectural issues to changing priorities. Creating a realistic budget will help you account for contingencies without draining your savings account.
Finding Good Help is Hard
On the same note, it’s ideal to find contractors that have been recommended or having glowing reviews online. Becoming a licensed contractor is not difficult and there are a lot out there who will cut corners for the sake of boosting their profit margin. The last thing you need is to renovate your basement and find out that it no longer passes inspection.
Trusting a new contractor is a gamble in itself, which is why it’s important to do research and interviews before commiting to a project.
What Projects Net the Biggest Return?
Maybe your house simply needs to add a new kitchen because the old one is outdated. But if you’re looking to simply add new value to your home or give it a fresh makeover, then consider what other homes in your area have added to raise their value. This can be found in a comparative market analysis and will point you to some interesting additions that you may not have thought of.
Remember, there’s such a thing as over-improving, or purchasing an addition that adds little to no value to your home. Your home is an asset, so all renovation decisions should also be treated as an investment and seek to deliver you a return when you do sell the house.
Do I Borrow Money?
Now, this decision depends on your financial situation, obviously, but could it significantly distort your plans if you need to take out a loan. Again look at your home improvement project as an investment. If a larger renovation project will net you a larger return then taking out a loan would be a smart financial decision.
There are plenty of loans to choose from, such as hard money loans, renovation loans, and personal loans. Deciding on which will come down to the length of the project, size, and cost.
Don’t Fall for Trends
Trends come and go and most don’t deliver a long-term return on your investment. That graphic tiling may be what’s chic now, but in a decade when you sell that home it may look tacky. Would you still buy a home with shag carpets? While opting for more traditional design elements may actually be more costly, they’ll definitely net you a larger return.