Guide to Home Improvements for Homeowners and Investors
Whether you are a first-time investor planning to buy, remodel, and “flip” houses, or a homeowner getting your house ready to sell, knowing which home improvements offer the biggest return on the cost just may be your key to success.
Not all home improvements are created equal. Some are quite expensive and yet offer only small increases in property value. Others are small and affordable updates that can make a big difference when it comes to both real and perceived value. For the investor and for the budget-conscious homeowner alike, this second type of home improvement is the way to go.
In this guide, we at Chicotsky Real Estate Group have compiled the best of expert advice and industry know-how to get the highest selling price for your property. While home improvement always takes time, a bit of effort, and some cash, planning your home improvement strategy before you begin and then sticking to the property updates that offer the biggest “bang for your buck” will undoubtedly pay off in the end.
The “Fix & Flip”
House flipping has been a popular option for real estate investors for many years. Simply defined, “flipping” a house involves purchasing a home that needs renovation or repair, fixing it up, and then selling it again for a profit. Most buyers are looking for homes that are ready to live in, creating a steady demand for remodeled homes.
When done properly, there is good money to be made flipping houses. But costly errors can and do happen. Some of the common traps that first-time “flippers” fall into include paying too much for a property, failing to do enough market research before choosing a property, and spending time and money on the wrong improvements. A detailed plan, a clear budget, and an understanding of which home improvements will add the most value to a property are all important parts of successfully flipping houses.
Preparing a Home for Sale
Although different in situation, homeowners preparing a property for sale also need to plan to make cost-effective home improvements. Particularly in competitive markets, buyers are looking for homes that don’t need a lot of work before moving in. While it is possible to sell a home as-is, you will lose out on the best offers that way.
To sell your property at the highest possible price, doing a little renovation is the best course of action. For this reason, homeowners and investors alike will benefit from learning more about home improvements. At Chicotsky Real Estate Group, we’d like to help with that. In what follows, you’ll learn about the steps that you can take to help you sell your property for the best possible price.
Do Your Research
Although many people find great satisfaction in customizing their home to their particular needs and wants, not all home improvements actually increase the value of a property. This is particularly true if the improvements you make are inconsistent with the type and quality of the homes in the area in which your property is located.
To ensure that your home improvements will add value to your property, do a little market research before you begin. Market research entails looking at similar properties in your area and determining their asking price, estimated market value, and the condition of the home. If all of the homes in your neighborhood are a bit older, check to see what kind of remodeling has been done.
You may find that while the homes around yours a well-kept, their owners are not necessarily investing in pricey upgrades. If that is the case, you may not need to replace an entire kitchen or bathroom, both of which are expensive and time-consuming projects. On the other hand, if the homes in your area feature the latest in upgraded appliances and amenities, you might need to do the same.
Knowing your area is a big part of knowing which home improvements are the right choice for your property. When you choose Chicotsky Real Estate Group, you have a market area expert in your corner.
Which Home Improvements Increase Property Values?
While there’s no hard-and-fast rule about which upgrades will get you top dollar for your house, there are some home improvements that consistently result in higher real or perceived value compared to the cost and effort involved.
One of the first items on your list should be minor bathroom upgrades. Depending on the condition of the bathroom, you may be able to simply re-caulk around the tub, shower, toilet, and sink for an easy, inexpensive facelift. Replacing old faucets and shower heads are also minor items that can instantly update a bathroom. Add some spray texture to damaged walls and a fresh coat of paint, and you’re in business.
For the truly hopeless bathroom, full replacement of the cabinets, sink, tub, toilet, and floor may be necessary. The good news is that remodeling an entire bathroom generally results in recouping more at resale than you spent, as long as you don’t go too fancy with the fixtures.
First impressions are important when selling a house, which makes landscaping an important part of any home improvement plan. Simply trimming bushes and trees, mowing the lawn, adding a fresh layer of bark to flower beds, and getting rid of any weeds can greatly improve curbside appeal. Planting some bright flowers near the front door or along a walkway is another quick update that can brighten up a home’s exterior.
If the landscaping around the house needs a bit more attention, consider visiting your local garden center for free design services and a quote. Aim for something that looks attractive but that won’t be too hard to maintain. Investing in landscaping is a wise choice, as it usually brings a solid return upon resale. But as with any home improvement project, it’s important not to overdo it.
If the kitchen floor plan is functional, there’s rarely a need to do a complete overhaul. In fact, even small updates can change the look and feel of a kitchen and add value to your property. Out of everything in your kitchen, the appliances are the most important items where resale value is concerned. Potential buyers will look at the age and appearance of the appliances before almost anything else, so if yours are ugly or dated, consider replacing them. It’s money well spent, in the long run, because few people are willing to buy a house that needs expensive items replaced right away.
Cabinets and flooring are two more aspects to consider carefully. If the cabinets could use a cosmetic update but are otherwise in good shape, consider having them re-faced or painted instead of replaced. Even new hardware, along with faucets and light fixtures, can change the entire look of a room. Update or get rid of old or tacky window coverings for a bright, fresh feel. Flooring options today offer a wide range of choices, from vinyl to tile and beyond. One thing you should not do is install new hardwood flooring; it’s expensive, hard to maintain, and simply doesn’t add to the overall value of the home enough to recoup the cost.
The best place to start in the rest of the house is with a new coat of paint in a light, neutral color. Buyers are particularly fond of contrasting trim, so consider using white or another light neutral that coordinates well. Don’t forget to caulk any open seams between baseboards, door moldings, and the walls. Gapping trim is a telltale sign of cutting corners.
For living rooms and family rooms, flooring is a big part of updating the space. If you have carpet, you need to either replace it or have it professionally cleaned. Period. A good rule of thumb is that if the carpet is stained, torn, smells bad, or is more than 5 years old, replace it. The same goes for vinyl. For tile floors, get the grout steam cleaned or replaced for an instant update.
Old or broken ceiling fans and light fixtures should be replaced, and make sure that all the light switch plates and outlet covers match. While these may seem like minor details, collectively they make a big difference when a potential buyer is forming a first impression of the space.
Fireplaces should be cleaned and repaired, if needed, and if the mantle is outdated or unattractive, consider installing a new one. Most fireplace mantles are not that expensive, and can add value to your property far beyond the initial price.
Many of the same updates that increase property values in the living room area are true for bedrooms as well. Lights and light switch covers, paint, and flooring should all be updated with current, mid-grade materials. Window treatments are another area that can make or break a room. Cheap or broken blinds, tacky curtains, or other eyesores should be removed; better a bare window than nasty coverings. If your budget allows, invest in some quality 2” blinds that are a neutral color and the right size for each window. By doing so, the perceived value of the home will dramatically increase, as will your chances of selling it for your asking price.
Home Improvements Not Worth Your Time (and Money)
Just like there are home improvements that will have a positive effect on your property values, there are some that will not. The reason for this is that buyers may not value the same home amenities that you do, and so if you plan to make these kinds of upgrades to your property, you will likely appeal to a smaller range of potential buyers when it comes time to sell.
There’s a common belief that when it comes to having a nice house, more is better. Property owners may think that a large, expensive remodel will raise the value of their house and bring a much higher price when they sell. But that is not necessarily the case. We’ve already looked at the importance of understanding the area in which your property is located. If your house is in a neighborhood with small, single-story homes, adding a second story or more square footage might make the home more appealing to some buyers, but ultimately will not significantly increase the property’s resale value.
A tidy green yard is an appealing feature in a residential property. A jungle in the backyard, however impressive, may not be. Large gardens, plants or trees that require expensive or time-consuming maintenance, and other features might be the homeowner’s personal paradise, but potential buyers may not feel the same way. Extensive landscaping can quickly turn to a bedraggled, overgrown mess if left untended for any length of time, and the potential buyer may feel that the maintenance required is too heavy a burden.
While we’re discussing exterior features, it’s important to mention swimming pools. An in-ground pool may seem like an upgrade that will not only raise the value of your property, but attract more potential buyers, too. Most of the time, however, that is not the case. Many buyers consider swimming pools to be dangerous and expensive to maintain – not to mention the sky-high water and electricity bills. There are exceptions to the rule, of course: if your property is in an area where swimming pools are more common, which is the case in many parts of Texas, a swimming pool may be a more desirable feature. But even then, you will probably not recoup the cost of installing a pool when you sell the property. They simply do not add enough to the overall value of the home.
Uneven High-End Upgrades
Buying all new stainless appliances and granite countertops for the kitchen is sure to make it feel updated, but if the only room in the house with upgrades is the kitchen, the value of the home may not increase by much. In much the same way, adding a media room with high-end video and audio capabilities might be an appealing feature, but if the entire house doesn’t match, you’ll run into trouble trying to convince buyers that they should pay more.
Generally, high-end remodels tend to add value to high-end homes, but not so much for those in the middle or lower price ranges. For this reason, the smart approach to making home improvements on houses in these price ranges is to make consistent upgrades that are similar in style and quality throughout the house.
Create a Plan (and a Budget)
Now that we’ve looked at which home improvements will increase property values and which ones likely will not, it’s time to get to work, right? Well, not quite. Starting any home improvement project, no matter how small, without a plan and a budget is a recipe for disaster. Everyone has heard the joke about construction taking twice as long and costing twice as much as you planned, a situation that unfortunately often turns out to be more true than we’d like. Careful planning before a project can go a long way toward making sure that your remodeling goes as efficiently and as smoothly as possible. In fact, even planning for a hiccup or two in the process is a smart idea.
If money (or time) is tight, you’ll need to prioritize. Figure out which home improvements will get you the highest return for every dollar you spend, and do those first. If you’ve purchased a home you’re planning to flip, you need to know how much you can spend on updates and still make a profit. If you’ve chosen the right property, you can likely expect about a 10 to 15 percent profit margin from the sale. Once you know that number, calculate carefully to find out how much remodeling you can afford.
Part of planning a successful home improvement project is making sure that you have the cash on hand to pay for it. For homeowners, this may temporarily reduce the amount of cash you’ve saved to purchase your next home or create some major changes in your household budget. For the fix-and-flip crowd, your financing should include funds for remodeling, which are usually in the form of a second mortgage but may also be drawn from operating cash.
No matter how you plan to do it, it important to know exactly where the funds for your home improvements are coming from and to have any necessary financing completed before you begin. The worst possible outcome for a remodeling project is to run out of money halfway through. This causes delays, creates major stress, and may have many other negative consequences for homeowners and investors alike.
Hire a Professional (or Not)
Some home improvements, like changing the outlet and light switch plates in every room, are easy enough that even beginning do-it-yourselfers should be able to get the job done without too much trouble. Experienced DIY-ers can handle a bit more, from caulking tubs to painting. Some experienced house flippers do most of the work themselves, while others rely on hired help.
When making a plan for any home improvement project, it’s important to stay realistic about your skills and available time. Jobs, family responsibilities, and other necessities of life will always be an important priority, and some jobs will require an electrician or other certified pro.
To keep your project on track and done right, you may find that hiring one or more professionals to help will actually save you money in the long run. Especially if you are planning to flip multiple houses, start building a network of reliable handymen, contractors, electricians, HVAC experts, plumbers, and more.
Some homeowners hesitate to use contractors because they’ve heard about shady practices, like trying to raise the bid halfway through a job or delaying completion for weeks or even months. But this is no reason not to get experienced, reliable experts to help you meet your remodeling goals. A good rule of thumb is that when you are hiring a new contractor or handyman, request and then actually contact their references and past clients in addition to getting a quote. It may seem like a lot of work at first, but it may actually save you many headaches in the end.
Ready, Set, Remodel!
Planning home improvement projects with property values in mind is a smart move for both homeowners getting ready to sell their home and investors who want to fix up and sell homes to others. At Chicotsky Real Estate Group, we have the resources you need to get it done right. After reading this guide, you now know that maximizing your property values is not some mysterious, insider-only secret. You, too, have the information and tools you need to get the highest possible price for your property. By following the steps and advice in this guide, your efforts will undoubtedly lead you to real estate success.