In the world of house fixing-up and flipping, the most notable mantra is to ‘buy low, sell high.’ Successful investors follow this strategy, and if executed well, it typically pays out a great return on their investment. To leverage this approach, investors focus on the investments that will yield the highest possible value yet require the least cost and minimal effort.
One of the key aspects of such home renovation is to avoid over-valuing the home by contrast to other homes in the neighborhood. Buy and hold investors take the same philosophical approach. In other words, if the other homes in the neighborhood are not outfitted with specific attributes, adding them to the investment properties is not likely to boost its value in any significant way.
So how does one approach remodeling old homes? What is entailed in knowing the difference between which home updates are valuable and which are not? When thinking about remodeling old houses, every case is different depending on the situation. As a Houston remodeling working exclusively with real estate investors and helping them make the most out of their remodeling project, we have found it's essential to keep in mind four different home renovations: basics, curb appeal, value-added, and personal preferences.
1. The Basics
There are certain things any buyer inherently expects to have in their new home: solid flooring, a quality roof, working furnace, solid walls, functioning plumbing, cleaned HVAC systems, and reliable downspouts and gutters. Upscale property basic expectations might extend to a minimal number of bedrooms and bathrooms and garages for multiple vehicles and amenities common to other neighborhood homes.
Of course, that doesn’t mean the entire home needs to be upgraded. Instead, the focus should be on smaller, less costly improvements of the home's essential attributes to assure the most important aspects are good, functioning conditions is the goal. Adding things to a home does not necessarily increase the home’s value. All it does is bring up the property to the standards of the home’s neighborhood. This means that when putting the home on the market, the price asked for it can be comparable to what other homes in the area are worth.
Getting your house project to stand out among the others around it is not a bad thing, but upgrading for the sake of upgrading, and pushing the home's value vastly over those around it, is not beneficial. Before implementing something to the investment property that requires a substantial financial investment, it's a good idea to study the neighborhood's competing properties to see what features and amenities they have to offer. By weighing the marketplace, you can decide what projects to hire general contractors to help you add value to the home without exceeding the neighborhood's property values.
2. Curb Appeal
The faster the home sells, the quicker you make money. What a prospective buyer sees when they arrive has a considerable influence on their decision about purchasing the property, so it is always a good idea to wisely invest in items that add curb appeal to the remodeled home. While these may not add considerable monetary value, they are pleasant for buyers to see. These include a well-groomed lawn, light landscaping, freshly painted walls and doors, updated fixtures, and clean carpets.
One of the prime esthetic investments in house lighting. It is great to have a bright and welcoming aura about a home but going overboard can run up the pressure on the home’s circuitry and skyrocket electric bills. For a more modern, cost-effective update, installing recessed or LED lighting fixtures is a good idea. Interior designers can assist in figuring out some cost-effective, energy-saving ways to light up the home.
The key is to update the decor in a tasteful, subtle way. Going too big or too flashy results in more drawbacks than it does benefits.
3. Value-Added
When adding something to a remodeled home, house flipping advocates promote investing more into projects that add value to the investment property. While it is fair to say that not every investment of this sort will garner back enough profit to make it worthwhile, many do.
According to the NAR (National Association of Realtors), value-driven additions that generated the highest ROI (return on investment) include kitchen renovations (such as new appliances and countertops), new windows, and new siding, typically recouping around 80% of the investment in the resale cost. Some other ideas that add the highest value to homes include refurbished decks, updated bathrooms, and energy-saving home alterations.
4. Personal Preference
When you look at a house, you often envision what you would love to have in a home. It is easy to get lost in such aspirations and forget that what is appealing to you may not be someone else’s cup of tea. Some examples of such perceived desired amenities include wine cellars, game rooms, hot tubs, swimming pools, and artificial ponds. Suppose every other home in the neighborhood has a two-car garage, and yours is a converted game room. In that case, you will undoubtedly stand out, but not necessarily in a good way.
Those who would have you believe that a swimming pool adds a lot of value to a home are incorrect. In fact, the enormous investment of installing one, the cost of maintaining it, the security and insurance factors involved, and its limited usage (outside of tropical climates), hardly makes it a worthwhile investment.
Conclusion
If you are decorating your own home, you are free to add whatever amenities you wish to aid your comfort, but when renovating a home as a real estate investor, decisions about what to add need to be made more cautiously. When getting ready to sell the property, it's important to remember to take care of the home’s necessities, add inexpensive but effective curb appeal attributes, and avoid picking up on costly additions that do little to nothing to raise the home’s value.
When you wish to engage in much customization, you are catering to your tastes, and those may not jive with what other buyers want. Even those real estate renovations that typically add value to a home may result in money spent that does not yield enough profit to justify the expense.
If there are any concerns about whether something will add value or an estimate is needed, contact us for assistance at 281-901-0707.
댓글