Prioritizing Home Improvement Projects for Lasting Value
By: John Garcia | Date Posted: April 13, 2023
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Committing to your next home improvement project takes careful consideration and resolve.
This is especially true in today’s economic climate. Inflation is belt-tightening; material costs are soaring, and high-quality help is never easy to find.
So while it may be tempting to put off needed improvements until everything “normalizes” again, a better strategy is to focus on projects that provide lasting value.
Projects with real benefits do not need to break the bank. Modest projects like garage door replacements can create more value than extravagant ones (like high-maintenance swimming pools).
Let’s consider these factors before committing to the next home project.
Immediate Impact on Home Efficiency
Global water demand is expected to rise 20-50% by 2050. Wood, stone, and steel are just some resources with increasing costs. Incremental projects that improve energy efficiency are the most direct way to “spend money to save money” while providing lasting value.
Mitigating daily utility costs and incentivizing future home buyers makes home efficiency projects appealing.
And if you have a general idea that increasing home efficiency is the way to go, a home energy audit is a great place to start.
Effect on Family Wellbeing
It doesn’t take elaborate remodeling projects to create a greater sense of well-being in a household. Often, simple changes, like a more open kitchen or better bathroom space, can bring a whole new energy to your living space.
Outside, gardens and gathering spaces can be created – often DIY – to enhance the atmosphere further. Any project where your family can have an easy hand in maintenance is a plus.
Projects with the potential for creating maintenance headaches, like swimming pools, gazebos, and water features, should be approached with much greater caution.
It may not show directly in dollar figures. Still, future homebuyers can sense when homes have a good track record of livability – whether previous families enjoyed their home or were ready to quit its upkeep. That will undoubtedly influence buying decisions.
Boosting Curb Appeal
Like projects meant for family well-being, home upgrades with “curb appeal” are valuable ways to harmonize your home with the neighborhood. This can include front door and window replacements, garden bed improvements, and even new exterior lighting.
Again, the goal is not to create the most elaborate features that don’t fit the neighborhood’s aesthetics. Too much trendy facelifting can quickly turn your home into an eyesore that will prove costly when attempting to sell.
Improvements to your home’s foundation may not provide instant energy savings or improve the look of your home, but these fixes must be considered if you hope to sell at a premium.
This is also true for the home’s guts – its electrical system, plumbing, etc. There is just no getting around these fixes. House hunters may miss a rotting wall, but the appraiser will.
Professionals will likely be required for these fixes – and they won’t be cheap – but knocking out these projects well ahead of time will give a prospective homebuyer real incentive to take your home seriously (more than any over-the-top cosmetic fix can).
Projects with the Highest ROI
“The reality with most home improvement projects is that they will come at a loss to the owner regarding direct return on investment. You will not see an immediate profit from a refurbished kitchen. That being said, plenty of projects consistently provide a higher percentage of recoupment cost come closing time.”, says Cliff Auerswald, President of All Reverse Mortgage, which publishes a list of the best reverse mortgage lenders in California.
A 70% ROI on a given home improvement project is well spent. The recoupment on a new garage door was over 90% of the initial cost; kitchen and bathroom remodel generally recouped between 50-60%. Here are some recoupment statistics for 2021.
Substantial home value increases largely depend on broader economic factors outside our control. A neighborhood may slowly develop into a hotspot when you wish to sell. Great! In this case, those home improvements will prove valuable in the number of bids you can receive. More bidders mean you can sell closer to the price you believe is right.
Home Project Financing
Prioritizing home improvement projects also means knowing how you want to pay for the upgrade.
That is the easiest path if you feel comfortable dipping into personal savings.
If you need to borrow money, consider these options:
Credit Cards can be helpful for smaller projects, especially cards with 0% introductory APRs.
Home Improvement Loans are unsecured loans that do not require your house as collateral. Your qualification and interest rates depend on your credit history.
A Home Equity Line of Credit (HELOC) is a secure line backed by your home and is often used for larger home improvement projects that might have unpredictable costs.
Home Equity Loans are a more modest alternative to a HELOC. It is a lump sum loan with a fixed interest rate backed by your home.
Reverse Mortgages are loans or lines of credit for senior homeowners, at least 62 years of age, who have built up a certain percentage of home equity. Loan amounts and payouts are variable, based on factors including where you live. Estimating potential loan amounts using a reverse mortgage calculator that considers all variables is accessible.
Government Loans and Incentive Programs are available for new homebuyers who have yet to build equity but need to make essential home improvements. These loans help you save on interest, but there are limits to the projects the government will subsidize.
Any one of these financing methods can be a great way to ease financial stress.
Putting off home improvement projects in today’s economic climate is tempting, but it is wise to keep moving forward. You can create lasting home value to hang your hat on through project prioritization and appropriate financing.
Thank you for reading!