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Maximizing Your Remodeling Investment

Every once in a great while, I come across some great data that you might find helpful. This is one of those times. I’ve uncovered not one but TWO great articles that address the question of maximizing the return on your remodeling investment, and since I don’t think I could do any better if I re-wrote them myself, I’ll give them all the credit and hope you learn as much from them as I did.


Article #1:
Remodeling Magazine Survey
Chart courtesy of ConsumerReports.org
Posted on AOL/Finance on 2/20/04

Remodeling: What pays most and least

Amid the current housing frenzy, many consumers have come to believe that money poured into their houses will return more than an Internet stock during the 1990s. We decided to test the proposition. We first turned to Remodeling magazine's annual survey, which polls hundreds of real-estate professionals, mostly brokers and sales agents supplied by the National Association of Realtors, to find out the amount various projects are likely to return. We used their 2001 and 2003 data (shown in the chart below). (More information is available at www.remodeling.hw.net. Once there, go to "Cost vs. Value 2003.") The survey assesses how much a homeowner can expect to recover if the house is sold a year after the project is completed. We submitted Remodeling's projects to real-estate appraisers provided by the Appraisal Institute, a professional association; they estimated how much homeowners were likely to recover from improvements over the same period. After three years, return is impossible to estimate, say our appraisers. They added other observations. On colors: stick with neutrals because they don't date themselves. On swimming pools: in some areas, a pool can detract from a house's value because the homeowner is on the hook for liability insurance and maintenance. On all projects: Those that add square footage to bring a house up to—but not beyond—community norms pay off the most. Projects are presented showing highest to lowest returns, as calculated by our appraisers.

Project Description

National Cost Average

Value
Recovered

Appraisers' Estimate of Value Recovered

Appraisers' Comments

2001

2003
(if available)

2001

2003
(if available)


Major kitchen remodeling
Add 30 feet of new semicustom wood cabinets, laminate countertops, resilient floor, center island, midpriced sink and faucet. Include built-in appliances.

$38,800

$43,804

81%

74.9%

50% to 75%

The more expensive the house, the more you will earn from the remodeling. It doesn’t pay, however, to install an ultra-expensive kitchen in a modestly priced house.


Bathroom remodeling
Update a 25-year-old 45-sq.-ft. bathroom with new fixtures, ceramic-tile walls in tub, and vinyl wallpaper.

9,500

10,088

85

89.3

50 to 75

Same as above. Adding a new bathroom to bring number of baths in line with community standards brings greater returns than restyling an existing one.


Attic bedroom addition
Build 225-sq.-ft. room; install 35-sq.-ft. shower/bath, heat, central air conditioning, insulation, and carpet.

31,400

32,863

74

92.8

50 to 75

Your new space is expensive relative to the potential resale recovery, unless finished attics are the norm for your area.


Master suite addition
Build new 384-sq.-ft. master bedroom over crawl space, with walk-in closet, ceramic-tile shower and whirlpool tub.

63,300

70,760

75

76.4

60 to 74

Most new houses have master-bedroom suites; the addition is an amenity that people will pay for, particularly in upscale neighborhoods. Brings an older home more in line with new housing.


Basement refinishing
Add a 600-sq.-ft. entertainment area with a wet bar, 40-sq.-ft. full bath, and 144-sq.-ft. auxiliary room.

39,700

43,865

69

79.3

60 to 70

If of the same quality as the rest of the house, a finished basement will be a plus. Amateur, do-it-yourself jobs won’t yield maximum return.


Deck addition
Build 320-sq.-ft., treated-pine deck.

5,900

6,304

77

104.2

50

A very large deck like this won’t add significantly to the value of a modest home. A deck also may not add much if a patio is standard for the neighborhood.


Two-story addition
Add a 384-sq.-ft. wing over crawl space, with a first-floor family room and a second-floor bedroom with full bath. Include prefabricated fireplace, 11 windows, an atrium-style exterior door, heating, and cooling.

67,700

84

40 to 50

Added square footage itself is what an appraiser would value.


Family-room addition
Add a 400-sq.-ft. room on new crawl-space foundation with wood-joist floor framing, wood siding on exterior walls, fiberglass shingle roof. Add 180 sq. ft. of glazing, including windows, atrium exterior door, and two skylights. Tie into existing heating and cooling systems.

46,700

53,983

80

80.6

40 to 50

Because a family room is an amenity, it could bring a lower return than an extra bedroom or bath, unless every house in the neighborhood has one. It costs more to retrofit a family room on a house than to have it in new construction.


Sunroom addition
Add a 200-sq.-ft. sunroom to two-story post-World War II house including footings and foundation, walls of extruded aluminum with windows of double-paned glass. Insulate roof and ceiling. Add ceiling fan.

27,100

60

40 to 50

Adds square footage but as an amenity, not a necessity.


Reroofing
Remove existing roofing to bare wood; install 3,000 sq. ft. of fiberglass shingles with felt underlay.

10,000

60

10

Buyers expect houses not to have leaky roofs. They don't want to pay extra for a new roof.


Home office
Refurbish spare room.

10,500

55

10

Adds little to resale value. So-called smart houses, automated by computer, also add little.


Exterior repainting
Add coat of wood primer and coat of satin acrylic latex paint for two-story wood-sided house built post-1980.

8,300

75

10

Buyers expect a home with a decent paint job. Painting is maintenance, not an improvement. Further, we recommend 2 topcoats.

Article #2:
Bankrate.com article
Posted on AOL/Finance on 2/20/04

10 tricks for a low-cost, high-impact home upgrade

By Dana Dratch—Bankrate.com

Want to fix up the old place but don't have a bucket of money to spend? Luckily, if you focus your resources in the right areas, little changes can make a huge difference in the way your home looks—to yourself or potential buyers. Here are some low-cost ideas to get you started:

Begin with the front of the house. It's the first thing you, and your guests, will see. "Always repaint the front, the trim and the door," says Robert Irwin, author of Improve the Value of Your Home Up to $100,000. His trick: Pay special attention to the front door and the door handle. For potential buyers, "that's the first time they touch the house," he says. Twenty-five dollars worth of paint makes a door look new. And another $50 to $75 for a shiny handle on a freshly painted or stained door "makes an enormous difference," Irwin says.

Dress up the porch. Place two large planters on either side of the front door, with a profusion of healthy plants spilling out. "Think of your pots like clothes -- you want something that's going to go with the house," says Rebecca Kolls, master gardener and host of the nationally syndicated television series "Rebecca's Garden."

When you choose the plants, look for foliage colors and blooms that complement each other, just like you were assembling an outfit. "You wouldn't mix polka dots and plaid," says Kolls. Her rule of thumb: the plants should be twice as tall as the pot. Since you're literally assembling a garden in a pot, look for different textures. Mix perennials and annuals, blooming and nonblooming varieties. Include tall plants, to give the arrangement height and shape; ground covers, to spill out of the pot and down the sides to soften the edges; and an abundance of medium sized plants to fill in between the two and give a lush look. Squeeze in as many plants as you can manage, says Kolls. "Just pack them in there."

If you want to add another touch later, you can tie it in to the front door with a coordinating wreath, says Kolls.

Paint. "The biggest change you can make in a room is painting the walls, changing the color," says Linda Holmes, certified remodeler and president of Creative Carpentry Remodelers Inc., in Aurora, Ill. New paint "makes it look clean again."

"And paint the ceiling anything but ceiling white," she says.

Some pro paint tips:

  • Paint the trim a contrasting color. "It gives a little bit of punch to everything," says New York interior designer Michael Love, FASID, president of Interior Options Inc. Or stencil a crown molding onto the wall with paint. "It's not so tough," says Love. Just go slow and be accurate.
  • Another option: Paint a wall three different shades of the same color. Measure equal sections and use painter's masking tape to mark off each area, says Judy Pickett, ASID, a council co-chair for the American Society of Interior Designers. Do the bottom of the wall first with the darkest shade. Once it dries, do the middle section with the next lightest shade and so on. Want something really different? Go for big squares in various colors.
  • Paint the kitchen cabinets. If you're the handy type, also think about adding a new kitchen counter to give the room a whole new look. "It makes a huge impact," says Deborah Houseworth, ASID, president of DLH Design Studio in Chevy Chase, Md.
  • And don't limit the paint to the walls. Inexpensive, unmatched furniture gets a whole new look with a coat of paint -- especially white, says Love, who uses the technique in her own home. The trick also works with lamps, especially if you add a little glaze for an antique look.

Display photos. Have some favorite photos blown up, pick up some inexpensive frames at a discount store and line a wall, says Pickett, who also owns Design Lines Ltd. in Raleigh, N.C., who used this trick in her own office. "Pop them into frames, and it's the cheapest thing you can do," she says. "They really do have an impact." Her secret: Black and white photos are even more dramatic.

Shine a little light on the subject. "Add accent lighting, instead of the two ordinary lamps that flank both ends of the sofa," says Holmes.

A lot of discount and home stores are stocking inexpensive lighting options that can make a big difference in a room. Spotlights that plug into existing outlets can direct light to features you want to emphasize, like art or plants.

Houseworth lined a room with track lights, forming a perimeter about two feet from the walls, and painted the ceiling within the tracks a different color. "It looked like a gallery," she says. Cost: about $400 to $500.

Pro tip: look for tiny lights, about two to three inches in diameter, that just add a nice sparkle.

Or you can pick up on another hot trend and get a couple of candlestick lamps, says Holmes.

Make rooms instantly more spacious. Go through your rooms and get rid of one-third of your furniture and junk, says Irwin. Whether you need a little breathing room or you're getting ready to sell and move, this will give you more free space. And it makes it that much easier for potential buyers to picture their own furnishings in the home, says Irwin.

Give the yard a good clip. Trim back the trees and shrubs that block the street view of the house and especially the windows. A well-groomed yard that lets light into the home "looks a lot less sinister," says Irwin.

Create areas of interest in your yard. Start with one small section and create a focal point. "Small spaces can become terrific spaces and look much grander than they are," says Kolls, who advises picturing the yard as a series of "little rooms." Just do a piece at a time. Install a birdbath, bird feeder, arbor or bench with copious amounts of flowers and plants around it to create a mini-sanctuary. "You've got this great look for an inexpensive price," she says.

Trick the eye. To make an area of the yard look larger, use curving pathways and sidewalks instead of straight ones. Curves fool the eye and "make an area look bigger," says Kolls.

Use everyday objects in new ways. Sometimes the secret to less-expensive decorating is to look at things differently. Love had been searching for a set of long, silver-colored pull-handles for a large cabinet, but everything she found was at least four figures. Then she spotted exactly what she wanted in a package labeled "towel bars." Cost: $69.

Looking for a cart to serve as a bar in a study or dining area? Check out an office supply retailer or the office furniture area of your favorite home store, says Love. Chances are the wheeled cart being sold for a fax machine or computer would also make a stylish little mini bar.

Dana Dratch is a freelance writer based in Atlanta.
-- Posted: April 7, 2003

MORE INFORMATION

You’ll find lots more information about the home remodeling process in Managing a Renovation: Staying in Charge and Out of Trouble, our friendly and comprehensive homeowner’s guide to remodeling project management. Download the table of contents and a sample chapter, or go to the order form to purchase it.

We offer ready-to-use construction forms, including a complete remodeling contract, in our Bookstore, as well. Have a look.

And, you may want to look at our list of More Resources for some great design ideas.


Renovations Consulting, Inc.
903-7 Shellbrook Court
Raleigh, NC 27609
(919) 782-5982


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