If you want to spend your money wisely and make your renovation dollars work the best for you – having a home renovation strategy could potentially save you thousands.
Know Your Neighborhood
- Setting a realistic budget is very important when renovating your home whether you plan on living there for years or if you’re planning to sell.
- Research your area and learn what your neighborhood standard will tolerate.
- This will help you set a realistic budget for your projects and then you can make an informed decision as to where your renovation dollars will be best served.
- A good rule of thumb in determining how much you should spend on renovating your home is to base it on a percentage of your home’s value.
Learn The Value of Your Own Home
- You could hire a realtor or appraiser to assess your property and provide you with a current appraisal and how your home relates to the comps in your neighborhood.
- There is also a great online source www.zillow.com where you enter your address and compare your home with others in your neighborhood on an interactive map.
- It shows you the range of the property values in your community. Once you have an idea of your home’s current value you could then start budgeting and planning for your remodeling projects.
- If you’re renovating your home and plan to stay for 10 years then typically a range of 20%-30% of your home’s value is an acceptable amount to invest.
- If you’re remodeling it to sell – then a more conservative number to invest might be15% – 20% of your home’s value. Again, it depends on what your neighborhood can bare – and whether you live in a more modest, middle class or affluent community.
For example – If your home is valued at 350, 000 and your plans are to gut your kitchen space (without any structural changes) by replacing all cabinetry, appliances, fixtures, flooring, countertops and supplementing electrical – and your plans are to move in a couple of years then I’d suggest keeping the cost of the project within 20%. (So spending 70K would be a reasonable investment) And typically a kitchen remodel will have a return on investment of anywhere from 75%-100%.
The Cost vs. Value Report
To really take a peak into the renovation market I highly recommend checking out:
- Remodeling Magazine’s annual Cost vs. Value report is a fabulous resource where homeowners can compare national and regional averages for about 33 home remodeling and renovation projects in about 80 cities.
- It provides you with a description of the average projects in your area of the country – which allows you to gage where your project falls within your area – and what kind of ROI you could expect. www.costvsvalue.com. Click on 2010-11 Cost vs. Value report and zero in on your corner of the country. It will list the renovation trends of both mid-range and upscale projects.
