Where Should You Spend Your Money When Flipping or Renovating a House?
A better question to ask is where should you not spend your money. One of the biggest mistakes that new house flippers make is overdoing it, when good enough would have sufficed. Remember, you’re not always trying to make your flip the best house in the neighborhood, just one that’s on par with other homes in the neighborhood, and hopefully a better buy than others that are for sale. U.S. News and World Report published a great article today on which areas that you should not renovate on a home if you are looking to get a good return on your money.
House Flipping Don’ts
“If you think you might be selling your home sooner than later, here are four improvements to avoid:
1. Over-the-Top Kitchen Renovations: You may love gourmet cooking, so a $30,000 kitchen upgrade might be just to your liking. But this could be a turnoff for potential buyers who aren’t crazy about cooking. To them, the restaurant-sized stainless-steel stove, kitchen island and fridge just seem excessive, and they’re not going to want to pay for them. Instead, they’ll pass on your home and end up buying one with a regular kitchen.
Take a look at some kitchen remodeling ideas on a budget. You can still enjoy an upgraded kitchen without going overboard and compromising the value of your home. In fact, remodeling a kitchen for less than $1,000 is definitely a possibility.
2. Over-the-Top Bathroom Renovations: That ultra-deep jacuzzi tub and custom Kohler 360-degree shower you just installed might make your mornings a blast. But to budget or eco-minded buyers, all that water use is going to be a serious drawback. As with your kitchen, keep your bathroom remodeling ideas modest if you think you’ll be putting your home on the market any time soon.
3. A Pool or Hot Tub: Yes, a pool addition can add significant value to your home (11 percent on average in the Southwest, but only 6 percent in the Midwest where the swimming season is much shorter). If it’s above-ground, though, then knock 2 percent of your home’s purchase price, since they’re less appealing than in-ground pools. The problem is that pools are polarizing. There are constant swimming pool costs ($1,500 on average per year) and they require a lot of maintenance. They’re also a liability, especially for families with young children, and could affect your homeowners insurance coverage. Pools will limit how many people want to buy your home, so keep that in mind before you have one installed (or consider buying a home with an existing pool).
4. Overly Specialized Rooms: So, you just tore down the garage (which you never used) and built a four-season sunroom which resembles an English manor conservatory. You’re thrilled, but your potential buyers are going to be rolling their eyes. Where are they going to park the car and store the lawn mower and all their kids’ sport equipment? Installing nontraditional customized rooms (like indoor basketball courts or a basement music studio) is great if you’re going to be in your home for awhile. But potential buyers are likely to see this as a waste of space, and a project (and expense) they’ll have to deal with if they buy your home.”
Levin, Heather, “4 Renovations That Will Devalue Your Home,” U.S. News and World Report, website: money.usnews.com/money/blogs/my-money/2011/01/20/4-renovations-that-will-devalue-your-home January 20, 2011 (accessed January 20, 2011).
Kitchens and bathrooms sell homes and typically this is where you want to spend your money on a renovation, but don’t overdo it. The best way to know how much is to much, is by going to look at other homes in the neighborhood that are currently for sale. If nobody in the neighborhood has granite countertops, jacuzzi tubs, or heated toilet seats then you won’t want to put those in your home either.