This posting is about investing money in your house during this record
housing market slump. Please share your thoughts at the end and leave a comment.

Investing Money Into Your Home- Will I See A Return On My Investment?

With the housing market in a record slump,
one of the biggest questions I get from people is how much is too much to spend
on a renovation and will I see that money back when I go to sell my
house?
While it is a common belief that any money you put into your house
will add value to it, this is not always the case. There are really two
different categories that you put home renovations into- General
Maintenance/Upkeep and Visual Improvements.
1) General Maintenance- Projects
like replacing your hot water heater, patching a leaky roof, repairing damaged
siding, or sealing up cracks in the foundation are not going to show you a
return on your investment but they are going to be required to keep up the
overall condition of your home.
Regular maintenance can help extend the life
of your home but at some point there are things that are going to be replaced.
By avoiding repairs or maintenance on items like this will just make the
condition worse and will result in even more money being needed for
repairs
2) Visual Improvements- While that sounds very vague, this would be
anything that is not structural in nature or not necessarily required. This is
where investing money into your house is
going to pay off. Projects like renovating a bathroom or a kitchen, finishing
off a basement, adding a deck, or even landscaping the yard will not only spruce
up your home but they will also add value
That being said, not all of these
projects will yield the same return. For the same amount of money, finishing off
a basement might yield a 20% return on your investment while renovating your
kitchen or bathroom could yield a 75-90% return on your investment.
Even
though the rule thumb says that you will see a return on your investment by
renovating a kitchen or bathroom, or by finishing off a basement, that is not
always the case. If you are planning on selling your home in the immediate
future or down the road, putting too many personal touches on a space can
actually have a negative affect.
The same thing can be said for spending too
much on a given space. If the average kitchen in your neighbor is estimated at
$25,000 in value and you spend $60,000 on your kitchen, odds are you will have a
hard time convincing buyers that the house is worth that much more than your
neighbors.
Adding additional bedrooms or an extra bathroom is always a good
investment provided it is not taking space away from other usable space. Be
careful when taking usable space to create two spaces. Sometimes taking a
bedroom and cutting it in half will actually take value away from the house if
it wasn’t big enough to start with. It is always a good idea to have a real
estate agent give you some advice as to the impact a renovation will have on the
value of your home.
By investing wisely, you can see some significant returns
on your investment, whether it is a more comfortable living space for years to
come or a more attractive home for potential home buyers.

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