There are reasons for renovating a home. They could be for personal enjoyment – or even necessity. They could also be for improving the resale value of your home at some future date.
Whatever your reason, it is worth knowing what renovations will return most of your investment or even just a little bit more. Then there are those renovations which might be for personal enjoyment but will offer little return – and that is not necessarily a bad thing! Consider an investment of $10,000 for which there may be a 50% return – or $5,000. If you live in your home for 10 years, there would be a depreciated cost of $500 a year. You simply decide if having “X” is worth an expense of $500 a year. If it is, go for it! A home is meant to be enjoyed.
However you go about it – remember one very import thing about renovations. Do not renovate your price out of your neighborhood. In other words, if you are in a $200,000 neighborhood, and you make your renovated home hypothetically worth $300,000 – when you go to sell it- guess what is going to happen?
Much like exceeding the price line in your neighborhood, you can also create a white elephant. The example of taking a 4 bedroom home and making it a 3 bedroom or worse yet, a 2 bedroom, can make your house into something that just does not fit the buyer attracted to your neighborhood. When you sell, you may be forced into a deep discount situation – and your buyer may have to be willing to return the home to the number of bedrooms it was before.
Consider selling and moving on to what your new dream home should be.