Whether to Remodel
Your Remodeling Dollars Wisely
doubt about it, remodeling is expensive. A bathroom remodel can
quickly reach $10,000—and that's about where the most basic of
kitchen remodels start. In short, remodeling is an investment
and you want to make sure you get the best return on your dollars.
first step is to figure out what the market will bear. Get an
appraisal of your house as it is and then dig up the sale price
of houses in your immediate area that already have the improvements
you're thinking of making. If you can complete the project without
closing the gap between the current value of your home and its
future value, the project is worth thinking about. However, if
your house is already at top price for your area, then it's highly
doubtful you'll get back any of the money you invest in a remodel.
evaluate the cost of remodeling versus the cost of moving. Figure
out the cost of a new mortgage versus a cash-out refinance or
an equity loan, taking into account both interest rates and fees.
What are the costs of moving versus the costs of living through
a remodel (increased take-out and hotel stays, for example). And,
of course, figure out the average cost of a house with the new
features you desire in a neighborhood comparable to the one you're
in. Increasingly, people are finding it's cheaper to remodel what
they have than to buy or build something comparable.
it's seldom a good idea to undertake a major remodel as part of
a sprucing-up-to-sell program, it is a good idea to keep the tastes
and needs of future owners in mind when you do remodel. Remodeling
magazine does an annual report evaluating the return on investment
for a variety of home improvements. They crunch the numbers to
determine region by region what projects will return what percent
of your remodeling investment if you were to sell within a year
of remodeling. You'll find their full report online at www.remodeling.hw.net.
of Life Counts, Too
Finally, don't forget to consider intangibles such as neighbors
and schools. If you absolutely love your house and your neighborhood,
you need to take that into consideration. Resale isn't everything.
Even if there's little chance of recouping your investment when
you sell, it's OK to spend the money for that new deck or home
office as long as you understand that you are investing not in
the house, but in your quality of life.