What is a Good Investment, What is a Bad Investment?

By
Real Estate Agent with Clocktower Realty Group

Good Investment, Bad Investment

 
 
 
 
     Some people want to buy a house that is already perfect for them, meets all their needs and they don’t have to do anything at all to improve it besides paint a wall or two.  But for most people, the best quality in a home is potential.  They’d like to mold it into something spectacular in hopes their investment will bring them a sparkling return.  That’s making money work for you.  However, some people get side stepped into thinking any old improvement will get their money back, but it is not so. I’ve put together a few suggestions based on what will maximize return and what will not.  
 
Good Investment— Kitchens
     This is an area of the home that improving will always come out to your benefit.  Kitchen styles are constantly changing, appliances are always improving.  Compromising between your personal design aesthetic and what will appeal to buyers may give you a guideline when making fixture, appliance, cabinet and countertop decisions.  This type of remodel can span a small to large budget. Just remember that the crazier you go, the less likely you’ll get all of your money back.  If you do decide to go all the way, make it exactly how you want it, because it’s just for you.
 
Bad Investment— Playrooms. 
      This is a lifestyle decision.  If you have school age children and know you will be staying put for a while, adding a climbing wall or a princess castle will bring hours of entertainment and ignite your child’s imagination.  However, there is no telling if a potential buyer will feel similarly even if they have children, too.  Some might see the space as an office, a home theatre, a place to watch the Super Bowl.  This kind of improvement will most likely have to be undone when you want to sell.  Keeping that in mind can help you decide how permanent you'd like to make that transformation.
 
Good Investment— Additions. 
     Adding more space to live comfortably and entertain is always a great idea for your home both functionally and for your investment.  It increases square footage and potential in the eyes of a future buyer.  It can tend to be a large expense because of demolition costs, new foundation and additional roofing, so make sure you do it right.
 
Bad Investment— Small additions. 
     DO NOT just add a few square feet to your home to nudge out a little more space for a bathroom, or to bump out a bedroom.  You will not get your money back, and you will accumulate similar costs as a full-size addition.  You’ll still have to break down walls and lay additional foundation for space that will unlikely recover the cost.
 
Good Investment— Curb appeal.
      The outside of your home is one of the only ways to attract potential buyers initially.  The exterior is the first thing buyers see when shopping around.  It’s affordable and when done correctly could help you save money on heating a cooling.  Working with what you already have is a good jumping off point, like trimming hedges, mulching, etc.  Or, if your landscaping is already pristine, a fresh coat of paint for your entryway, shutters, or siding, can seriously give your home a facelift.
 
Bad Investment— Removing features.
     If thinking of investments solely, do not remove features that may prove valuable to potential buyers.  Even if you know you will never use the fireplace, another buyer might see it as a main attraction.
 
     Other high return renovations to think about are master suites and bathroom updates.  Other poor return investments, but lifestyle improvements are things that cater to your personal interests.  Pools or wine rooms come to mind.

     By all means, make upgrades on your home that will enhance quality of life rather than just focusing on the money, especially if you have growing children and plan on staying there for a while. Just bear in mind that some of those changes may have to be undone when it comes time to put your house on the market competitively. 

Comments (13)

Karen Fiddler, Broker/Owner
Karen Parsons-Fiddler, Broker 949-510-2395 - Mission Viejo, CA
Orange County & Lake Arrowhead, CA (949)510-2395

Nice post and congratulations on the feature. I think that it's so important to consider the value of something...good investment vs bad investment. Emotions are fine too, but thinking it through can keep you from having a bad investment years from now. 

Dec 31, 2015 12:35 AM
Rhonda Howlett

Thank you Karen! And yes emotions should be dialed down when thinking about putting money into a home!

Dec 31, 2015 12:36 AM
Richie Alan Naggar
people first...then business Ran Right Realty - Riverside, CA
agent & author

Yes to this post, its subject matter and the hostess Rhonda Howlett ...thank you

Dec 31, 2015 12:44 AM
Rhonda Howlett

Thank you Richie

Dec 31, 2015 02:43 AM
Susan Jacobsen
The Alliance Group Realty - Hilton Head Island, SC
20 Years Providing WOW Real Estate Service

Rhonda - CONGRATS on your FEATURED post!!! Reading this is definitely a GOOD investment :-) Good and to the point.

Dec 31, 2015 12:48 AM
Rhonda Howlett

Thank you Susan!!

Dec 31, 2015 02:43 AM
Joan Whitebook
BHG The Masiello Group - Nashua, NH
Consumer Focused Real Estate Services

lots of good tips here.  It is important when making upgrades you know which ones are the most likely to give the best return on investment.

Dec 31, 2015 12:50 AM
Rhonda Howlett

Thank you Joan. 

Dec 31, 2015 02:44 AM
Kat Palmiotti
406-270-3667, kat@thehousekat.com, Broker, eXp Realty - Kalispell, MT
Helping your Montana dreams take root

Yes, making upgrades should be primarily be for the home owners enjoyment, with an eye to reselling potential.

Dec 31, 2015 02:09 AM
Rhonda Howlett

Kat thanks for reading!

Dec 31, 2015 02:44 AM
David Alan Baker Laveen & South Phoenix Realtor
Keller Williams Realty Phoenix - Laveen, AZ
Your local Expert

I agree with Kat above me, it really should be first about enjoyment, second about resale.

Dec 31, 2015 03:14 AM
Rhonda Howlett

Thanks for reading my blog David!

Dec 31, 2015 03:17 AM
Anonymous
Ron Buck

Good advice. I agree with all your recomendations.

Dec 31, 2015 03:40 AM
#7
Linda Guess
Keller Williams Tri-Lakes Branson, MO - Branson, MO
Branson area real estate sales.

Good job Rhonda Howlett.  Congratulations on your featured blog.  Good content.

Dec 31, 2015 04:16 AM
Rhonda Howlett

Thank you Linda!

Dec 31, 2015 04:25 AM
J.R. Schloemer, CRS
Kentucky Select Properties - Louisville, KY

Great post and great points. I love when homeowners do wise investments that add value and marketability to a property. It is so disheartening when sellers point out things they did to "improve" their home, but you have to inform them they could have spent their money beget with a different project or the project on a different scale. 

Dec 31, 2015 12:36 PM
Rhonda Howlett

J.R,


 


Yes it is very sad to see the money they spent on improvements turned out to be a waste.

Jan 04, 2016 04:46 AM
Thomas F. Scanlon
Borgida & Company P. C., CPA's - Manchester, CT
CPA, CFP

Rhonda Howlett - Well done. Excellent post. Curb appeal is crucial.

Cheers,

Tom

Dec 31, 2015 11:15 PM
Rhonda Howlett

Thank you Thomas!

Jan 04, 2016 04:46 AM
John Novak
Keller Williams Realty The Marketplace - Las Vegas, NV
Henderson, Las Vegas and Summerlin Real Estate

Homeowners need to consider how their additions will be perceived 5-10 years from now. If it will still look good then, it's probably a wise choice today.

Jan 01, 2016 11:24 AM
Rhonda Howlett

That is very true John. Thank you!

Jan 04, 2016 04:47 AM
Praful Thakkar
LAER Realty Partners - Andover, MA
Andover, MA: Andover Luxury Homes For Sale

Rhonda Howlett excellent summary. Kitchen and Bathroom always has the best ROI - when it comes to upgrades/updates.

Jan 01, 2016 01:43 PM
Rhonda Howlett

Yes they do Praful. Thank you!

Jan 04, 2016 04:47 AM
DEANNA C. SMITH CERTIFIED MOBILE NOTARY
Certified Mobile Notary Signing Agent - Smith Mountain Lake, VA
Highest Ranked Certified Mobile Notary in Virginia

Kitchen and bathroom renovations usually increase the value of a property Rhonda Howlett and curb appeal can't be overlooked.   Very good post and congrats on the feature.

Jan 06, 2016 07:12 AM