What you need to know before you decide to commit to keeping an existing house, sell or purchase one when it comes to new renovations.
Home Renovations How To
When it comes to renovations, there are a few things you need to consider which I shall address by listing some questions then answering them. We can look at three key factors here that make a world of difference when renovating a house. You keep it, sell it or purchase an existing home.
Let’s look at each of them by the questions I have created to see the difference:
What is it you want to do?
1/ With a home your planning to keep, one thing you should always bear in mind is resale value. The area you’re residing in has a certain property value for the type of home you own and you’ll want to know how long your planning on staying in the home after your renovations are complete.
The reason for wanting to know the value of your home or at least you should want to know for example. Let’s say the street value of the homes in your neighborhood range from $200,000.00 to $400,000.00 on average. For simplicity, we are going to say that the houses are cookie cutter meaning the builders constructed the same basic house so the values at the time of sale where the same.
Now here we are ten years later some houses totally upgraded and others not touched or taken care of properly hens the price with some appreciation over the years $250,000.00 to $500,000.00. When you plan to stay and your house is worth $350,000.00 you can consider how much you’re willing to invest into your home before you max out above the street value.
For instance if your planning on doing a total makeover worth $180,000.00 and two months after completion you need to sell for sudden job relocation, that’s going to hurt. Your $30,000.00 over the top of the market and people may not want to pay the higher price.
If you can stay living in the home for another 2-3years, then perhaps the market will catch up, and your investment will once again be stable. By knowing the value of your home plus keeping the total cost of your renovations at or below market value for your neighborhood you’ll keep your investment and yourself in a better financial position.
2/ When looking at selling your existing home, we already know about the market value by getting comparable comps, so it’s a matter of what will give you the best bang for your buck. If you sell the house with no renovations how much would you get? If you do some renovations so you can sell the home at a higher price, do you end up with more money after you calculate the extra money spent on improvements? Believe it or not, sometimes it is just not worth doing any excessive renovations before selling.
When selling before doing any renovations, know your market, then compare the cost of renovations to potential profit to see if it’s truly worth the time and money. Rule of thumb is to take care of all minor repairs, clean everything up, and a fresh coat of paint goes a long way. For larger renovations be sure to run the numbers before you get into deep!
3/ Purchasing a home is a little different than selling and offers you a better return to renovate knowing you plan on staying in the home for years to come. When you’re buying a home you’ve taken the guesswork out of the value because you’re the one setting the price you’re willing to pay. With that in mind, you can then figure out what you would like to renovate and get an estimate of your total cost.
The downside is you have no history of the home and could get some surprises once you start the renovations, as they say, “opening up a can of worms.” A good home inspection and some research can save you a lot of trouble in that department.
Are you planning on doing any of the renovations?
Whether you keep, sell or purchase a home, one of the biggest factors to renovations comes down to how much are you planning to do. The more work that you are capable of doing yourself, the more you can save on the budget or more renovations you can complete for a less overall cost.
One of the other things when you have the time to do your renovations, you also save on all the extra taxes and hourly labor rates. Most contractors bill you full trade and helper rates with their company charges on top of that. Example: a certified electrician where I live will cost you $25.00 and $15.00 for his helper, but $40.00 is not the bill. You will pay at least $55.00- $75.00 per hour plus added taxes on top of that from the electrical company. Each sub-trade you get will cost extra.
How many different tradespeople do you need to do the job?
The amount of tradespeople you require depends totally on which renovations you’re performing and are you handling any of the work yourself. If you are gutting your kitchen and doing a total makeover with changes, you may possibly:
- Hire a general contractor, and he brings in his crew. Electricians, plumbers, drywallers, tapers, carpenters, tile setters, painters, countertop, and cabinet installers to get your job done.
- Decide to be a general contractor and save some money and hire the appropriate sub-trades for the job.
- Save even more money by being the general contractor and doing some of the work yourself and just hire the extra trades you need.
One other thing I would like to mention at this time, is whatever portion you do will have no warranty for workmanship, your warranty is only for what the qualified tradespeople have done. Without qualified tradesmen, you are just dealing with what we in the trade refer to as curbside warranty. Once unqualified people have been paid they are gone, never to be seen again unless you’re going to give them more money. ( Unqualified people can cost you serious money in the long run!)
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