Determining the Cost and Benefit of a Home Renovation Project
Often, home owners want to update the kitchen with granite countertops, install new flooring or renovate the basement to make their homes more appealing to buyers. Before you begin planning your renovations, however, come up with a blueprint for how much value these will add to your new home.
Here are some tips on what to consider when calculating the costs and benefits of performing a home renovation project:
1. Calculate the costs of your renovation project.
Estimating how much you will spend on installing hardwood flooring or purchasing new appliances is fairly easy to do. However, calculating cost can become difficult if you don’t consider the full scope of the project. Before committing to a renovation, consider the size of your home, the amount of materials needed, and the length of the project. Only after you’ve calculated the total cost can you assess whether renovating is a savvy investment.
2. If needed, ask for professional assistance.
Refusing to hire a professional contractor is another mistake that many home owners make. While it’s possible to successfully complete simple projects on your own, more complex projects like remodeling a basement should be left to a reputable contractor. If you’re anticipating a large renovation project, you need to start pricing the cost of labor through local contractors. If you can’t afford to have a contractor renovate your home, try doing some of the simpler renovations on your own while saving up for the larger projects.
3. Determine how much value the renovations will add to your home.
Only after you determine the cost of the renovation should you estimate how much added value it will bring to your home. If you’re spending thousands of dollars to upgrade your home with features like hardwood flooring and granite countertops, you need to be able to justify the investment.
Select which renovation projects offer a greater return. For example, hardwood flooring usually offers a greater return on investment than granite countertops. According to HGTV, kitchen remodels will help you recoup between 60 and 120 percent of your investment depending on what you renovate, while a bathroom addition can recoup 80 to 130 percent.
But home owners are encouraged to meet with an appraiser or a real estate agent if they really want to know how much they stand to recoup and for help in calculating just how much that renovation project will add to their home’s current value.