Whether you are renovating a property for personal reasons or for financial gain (like flipping) you must carefully think through and plan your renovations.  Some renovations will add their entire cost right back into the value of your house.  Others can actually even detract value depending on your neighborhood.  Being that the average American only stays in their current house for 5 years, one should keep in mind future sale considerations.  Here are some great tips for property renovations that will return the greatest value and add to your properties resale desirability and usefulness:

First, before you just go and knock out a wall, add on a extension or hire a general contractor for that additional room you’ve been wanting, it’s always a good idea to take in your local comps (current comparative sales figures) and see what is and isn’t inline with the neighborhood.  It is always a good idea to ask a friendly and knowledgeable real estate agent as they can quickly tell from their experience and research what is inline and below or overkill for your area.  You can also look on your own by attending open houses and looking at and researching houses for sale in your neighborhood. 

This research is often times referred to as doing your due diligence in the real estate trade.  Research like this will tell you if it is a good idea to add granite countertops and custom cabinets in your kitchen or go with refacing (usually half the price of new cabinets and looks just as good) of the cabinets and less expensive countertop materials.   We may all want the best, but depending on your neighborhood, some renovations and upgrades could take many, many years to be recouped if you were to sell your house.  If you are already at the highest prices for your neighborhood you don’t want to overextend yourself by adding a 3^rd bathroom, for instance, when most of the other homes only have 1 bathroom. 

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Basically the rule here is you want to be the little fish in a big pond (one of the lower priced homes in the neighborhood).  You don’t want to be the big fish in the little pond (most expensive house in the neighborhood).  The reason for this is simple – if you are the low priced house in a nice neighborhood your home will sell faster and all the upgrades, renovations, etc… that everyone else adds to their homes in your neighborhood will only add to your home’s value.  If on the other hand, you are the high priced home in the neighborhood, many buyers may not agree with your renovations and most likely will not offer what you want or need (because they can get similarly sized houses in the same neighborhood for less).

Basically, your renovations and such will help bring up the lower priced home prices more than add to your own.  Remember, regardless what your house may appraise for after the renovations, the real value is what a buyer offers and pays for, the appraiser is just giving you a figure and is not buying your house.  Now, that is where your research is essential to uncover what renovations would be good, what would be marginal (still okay if you will get lots of personal use from it), and what would be a bad decision.  Another good tip is that research will help you uncover whether a HOA (Home Owners Association – if you have one) will allow some or all of the renovation ideas or plans and whether it would be better to submit them together or individually (keep in mind some renovations will require local permits and similar).

Now, once you’ve done your research you will find that certain renovations like kitchens and bathrooms return the highest value upon resale – nearly 100%.  This is followed by items like room additions, offices, and adding or redoing basements,  attics, and enclosed porches.  Generally, adding to your heated square feet is a big plus, but again you need to keep price in consideration.  In tougher markets like now where there are fewer buyers, you will need to be priced to sell if you should ever want or need to sell your house. 

Now, I left out one more very important part of many renovations as it is actually work on the property and not the house – landscaping.  Landscaping directly affects curb appeal and will determine how many buyers even make it in your front door to see your interior renovations.  Landscaping, when properly done, will add 100% of its cost to your homes value and help it sell much faster.  This is why so many real estate related TV shows like Flip This House, Designed To Sell (which will give great ideas on renovations and cheap fixes that can greatly add to your properties value and help you sell quickly – I personally recommend this TV show!) and other shows on HGTV and other networks always mention curb appeal and landscaping.  It is akin to product placement and packaging at your local retail stores – if the packaging is bland or ugly it will not do well. 

So there you have it.  For renovations you should always do your research.  This will help you stay more in line with your neighborhood and gain the best return on the value of your property.   

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