Every homebuyer knows that, far from being the money pit that it can sometimes seem, property is one of the best investments we’ll ever make. Time, alone, can add value if the housing market goes the right way, and, as we’ll discuss here, experts widely believe that home improvements can also more than pay for themselves.
The trouble is that, if you’re staring down the barrel of expensive renovations, it’s easy to get bogged down in the technicalities of whether an improvement really is going to prove lucrative. That’s an issue considering that, often, we seek home loan refinance for jobs like these on the assurance they’ll pay for themselves. If things don’t work out that way, you could end up owing more than you make, or at least failing to pull a profit.
That can come as a significant blow, and many homeowners feel deceived by misinformation when it happens, but that needn’t be the case. In reality, well-planned home improvements can certainly pay for themselves. All you need to do is consider the following to make sure of it.
Look for local references
Often, misunderstandings regarding how lucrative improvements can be stem from generalizations about the housing market. Quite obviously, a loft conversion isn’t going to offer the same money-making benefits in a remote country house as it would in a city property. There’s simply no way to compare the two, and trying to do so is guaranteed to lead to disappointment.
To make sure that doesn’t happen, always look at local properties with similar improvements for reference. It’s now incredibly easy to look at local houses on the market, and even to view past sales figures. Doing so should enable you to see first-hand how much a like-for-like improvement is worth in your particular area.
By checking this information before you commit to anything, you can judge whether a job is worth doing and, if yes, how much you can spend on it and still see your money back.
Understand the most lucrative solutions
While it’s true that home improvements can be lucrative, some are most definitely more worth your while than others, sometimes surprisingly so. For instance, loft and kitchen conversions will only add around 10% to overall house value, while bathroom renovations are even lower at 3-5%. These may still seem like large enough sums but, when you consider how much you’ll pay for them in the first place, they aren’t exactly big earners, if they’ll bring you any profits at all.
By comparison, popular additions such as a garage or cellar conversion can increase prices by as much as 30%. These jobs, ultimately, don’t cost a great deal more than those lower earning options, meaning that you’re almost guaranteed to see a much better return from getting stuck in.
And, of course, improvements such as decoration, which many of us make the mistake of investing in before a move, don’t offer any monetary gain at all, making them most often not worth your while from a financial perspective.
Factor for passing time
Before you assume that you’ll ultimately cover the costs of improvements down the line, it’s also worth bearing in mind how long you intend to stay in a property after the event. After all, even an addition or renovation that adds value now might not necessarily do so when you come to sell. And, if you’ve refinanced for the purpose, that’s going to leave you in hot financial water.
The good news is that the big earners mentioned (garage conversions, etc.) generally hold up well as they add a lasting room onto your property. By comparison, bathroom or kitchen conversions that already held questionable value can altogether fall out of favor over just a few years. After all, those shiny new fixtures won’t last unless you intend to sell tomorrow.
While you should never hesitate to invest in these changes if you think they’ll improve your living situation, it’s thus pointless to consider the ultimate impact on home value. As much as we hate to break it to you, there probably won’t be any.
Always consider the costs of your alternatives
As house prices generally continue on an upward trajectory, more homeowners than ever are considering supposedly value-adding changes over a complete move into a new home. This is, in large part, fantastic news, but as with everything, you should always consider the costs of all your options.
Admittedly, this isn’t as easy as just looking at upfront pricing which, as well as failing to represent real value where work is concerned, will always see a home move coming out on the bottom. The trouble is that this is ultimately unrepresentative as it doesn’t factor for anything other than the obvious.
To make sure that you’re gaining an accurate representation of costs across the board, you should instead consider essentials such as –
- The square floor space on offer
- Potential longevity of your investments
- Whether you would need to move in the future regardless
- Etc.
By asking these questions and studying the market vs costs quoted for the work you can say, once and for all, whether your chosen home improvement is really as lucrative as the experts have led you to believe.
A final word: to improve or not to improve?
As you can see, home improvements aren’t the cut and dry value-adding solution that many of us have been led to believe, but that by no means suggests that they aren’t still often worthwhile.
By doing your research and understanding the value you could add versus the state of the market on the whole, you’ll be in a much better position to make informed decisions, not only about the work you pursue but also about how you choose to pay for that work.
Ultimately, your goal here should be to ensure yourself a home that is exactly what you dream of. Simply make sure that you’re approaching that reality with the fairest possible overview to ensure that you don’t pay over the odds to achieve it.