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Property investors grapple with the perennial question: Should a property be renovated for rental or sale? And, whichever path is chosen, how can one maximize home value without breaking the bank? The decision to increase home value necessitates careful consideration of the extent of work that should be invested in the property. Recognizing that a one-size-fits-all approach doesn't apply, the remodeling industry offers a plethora of ideas, ranging from kitchen renovations to energy-efficient lighting, to boost home value.
What Boosts Property Value?
Undoubtedly, minor kitchen renovations offer substantial returns on investment. As per Remodeling magazine's 2023 findings, projects with over 100% return on investment include HVAC conversion/electrification, replacing garage doors and front doors, and adding a manufactured stone veneer to the home exterior. Additionally, siding or window replacements, such as vinyl siding or vinyl replacement windows, are perceived as valuable by potential buyers.
Strategic Approaches to Boost Home Value
1. Add Square Footage:
Transforming a one-bedroom into a two-bedroom or increasing the number of bedrooms can elevate your property to a higher price tier. Consider adding a bonus room for optimal results.
Always adhere to proper permits and consult with local building inspectors to ensure compliance.
2. Remodel Bathrooms:
Finishing half bathrooms, if space allows, is a smart investment, with a full bathroom potentially increasing home value by up to 20%.
Consider adding a shower for added appeal and functionality.
3. Convert Garage into Usable Space:
Garage conversions, while potentially looking awkward, can significantly increase property value, particularly in areas where bedroom count affects rental payments.
Gauge the neighborhood and property layout before deciding on a garage conversion.
4. Finish the Basement:
Finished basements can enhance a home's appeal, with an estimated 86% of project costs recovered at the time of selling.
Ensure bedrooms in the basement have egress windows for safety and regulatory compliance.
5. Renovate the Kitchen:
A well-designed, open kitchen adds significant value to a property. Consider removing walls for a more open layout.
Opt for modern trends, such as light-colored countertops and energy-efficient appliances.
6. Maintain Curb Appeal:
Regular outdoor maintenance, including landscaping and exterior upkeep, is essential for creating a positive first impression.
Boosts resale value by 1% to 5%, showcasing the importance of a well-maintained exterior.
7. Install New Flooring:
Seamless flooring throughout the house creates a sense of continuity and spaciousness, appealing to potential buyers.
Hardwood floors are a popular choice for their modern look and easy maintenance.
8. Create an Open Floor Plan:
Open layouts, while slightly less popular than before, still appeal to a majority of buyers, offering a more spacious and illuminated feel.
Prioritize structural support considerations before making significant layout changes.
9. Replace Exterior Doors:
Upgrading entry and garage doors, especially with energy-efficient options, yields a potential return on investment of around 75% to 102%.
Consider door color as it can influence resale value.
10. Revamp Exterior Paint:
A fresh coat of paint on the exterior, addressing any chipping or wear, significantly enhances a property's visual appeal.
Adds over $7,500 in resale value on average, making it a cost-effective renovation.
11. Add a Deck or Patio:
Outdoor living spaces, like decks or patios, contribute to the overall lifestyle appeal of a property.
Personal preferences play a role in the desirability of outdoor features.
Calculating Home Value ROI
Evaluating return on investment (ROI) is crucial for real estate investors. The formula is simple: ROI = (investment gain – investment cost) / investment cost. Consider factors like as-is price, sold price after updates, and project costs when calculating ROI.
Financing Home Renovations
Explore financing options like personal loans, cash-out refinancing, or home equity loans for home renovations. Assess interest rates, repayment options, and overall costs before choosing the most suitable financing method.
In conclusion, every upgrade should align with the property's potential market value and cater to the preferences of the target audience. Diligent planning, thoughtful execution, and a strategic approach will undoubtedly contribute to increased home value in 2024.