If you’re like many homeowners, the value of your home has increased in recent years with a good economy. That increase in home value means you have more equity, and you might be considering using some of that equity to renovate and improve your home. Before you do, though, make sure that the renovations you’re planning are going to actually add value to the house, versus just being an expense (or worse, something that actually degrades the value of your home).
Updating Your Kitchen
A remodel in your kitchen often adds value to your home, and can make it easier to sell the home later if you decide to do so. An outdated kitchen can be a significant detractor during a home sale, but some new cabinets, updated flooring, countertops, and other improvements can quickly turn an older or less functional kitchen into a gathering place at the center of your home. You can often recoup a significant amount of what you invest in a new kitchen when you sell your home. Just make sure you don’t go too crazy on the upgrades, a gourmet kitchen fit for a 5-star restaurant probably doesn’t fit in your quaint mid-century home.
Add a Bedroom
This might sound like a significant undertaking, but we’re not talking about construction that alters the actual footprint of your home; instead look at space that already exists and could easily be converted to a bedroom. For example, attic space above your garage, a den or home office you never use, or an unfinished part of the basement. For some of these spaces it’s as simple as adding drywall, paint, electrical, and flooring. In others it might require some minor construction to add a closet. Make sure that any space you plan to convert to a bedroom meets building code, meaning it must have two means of egress (a door and a window or similar).
Create Space for Renters
One project that can instantly return value is creating space in your home that you can rent out. The most common are basement apartments, but you may also be able to add a small apartment over your garage or outdoor storage space. Once it’s done you can rent it out and recoup the costs right away. Check your local building codes to make sure you are allowed to rent out part of your home before you build a separate apartment.
Having plenty of bathrooms is a great way to appeal to a wide range of potential buyers, but it can also make your life easier even if you’re not planning to sell. Most home renovation gurus estimate that you can recoup 80% to 130% of your bathroom addition when you sell. Event a half bath can go a long way, and could be built in existing space like a converted closet or under the stairs.
When you’re ready to get a home equity loan for some renovations, make sure you check local building regulations to get any necessary permits, and set a budget so you can stick to remodeling that will add value to your home.