After moving into your home, you may be thrilled to have established equity from your down payment on day one of ownership. You may also be eager to increase your equity with each monthly mortgage payment. Equity will also increase as your home’s value increases. Value increase is associated with improving market conditions as well as with home improvements and upgrades. This means that you have direct control over your home’s value through the improvements that you choose to make. However, the cost of some improvements is recouped more significantly than others.
Factors That Influence Your Return
Before you jump headfirst into home improvement projects, keep in mind that numerous factors influence your rate of return. You may research for example, that the cost of a kitchen renovation may be recouped up to 120 percent. However, the actual rate of return will be based on your market, the overall appeal of the features that you install in the space and more. For example, if you spend $50,000 renovating a kitchen in a starter-home community, you may not realistically recoup that full amount. If you install blue or red countertops in an area where neutral tones are preferred by buyers, you may also struggle to recoup the full amount of your investment.
When you are planning home improvement projects for your home, spend time researching listings of similar homes in your area. Pay attention to the style and quality of features in comparison to the price per square foot. You understandably may want your home to be the nicest home in your area, but avoid taking an over-the-top approach if you want to recoup as much money as possible from your projects.
Top Home Improvement Ideas That Add Value
With these factors in mind, understand that the cost of some well-planned home improvements may be recouped more easily than the costs of other improvements. These are some of the home improvement ideas that generally may add more value to your home:
1. A Kitchen Renovation
When renovating your kitchen, think about the condition and style of the rest of the home as well as expectations of buyers who may be looking for homes in your neighborhood. If you live in a relatively new home with fairly modern and appealing features, this may not be the most cost-effective renovation project. Simply repainting the walls and updating hardware may be cost-effective. On the other hand, if your kitchen has not been updated in several decades, a complete overhaul may be in order.
2. A Bathroom Renovation
Like the kitchen, bathrooms tend to show the age of the home because so many of the features are built into the space. Renovating the master bathroom often results in a larger increase in property value than a secondary or powder bathroom may yield, or you can renovate all of the bathrooms for a more substantial increase. Keep in mind that your home ideally should have enough bathrooms to correspond well with the number of bedrooms. Adding another bathroom to a home that only has one or two bathrooms may be beneficial.
3. More Square Footage
Your home’s value is calculated by the price per square for similar homes in the area as well as by the amount of finished square footage. Therefore, adding more square footage is an excellent way to boost value. A cost-effective way to add square footage is to finish out the garage, basement or attic. Consider what your home’s weaknesses are when deciding which areas to focus on. For example, if the master bedroom is not large enough to accommodate a king single mattress and a full suite of bedroom furniture, it makes sense to enlarge the master bedroom or to add a new wing onto the home to create a new master bedroom.
These are only some of many areas to focus your attention on. For example, updating the front entryway, installing energy-efficient windows, adding a deck and more may also be cost-effective. As you decide which improvements to make to your home to increase value, keep in mind that your plans also should improve the home’s functionality and style to your satisfaction
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