Sinking money into renovations is a big move, so don't just jump right in.
A few years ago, my husband and I decided to finish our basement, including putting in a full bathroom and some other features that ran up a pretty large tab. We spent some time gathering quotes from contractors before choosing one to work with. But that's not the only legwork we did before signing a contract. We also looked at other homes for sale with finished basements. Though we ultimately decided to move forward with our project, that was an important step.
Seek out alternatives before renovating
It's one thing to sink a little money into a home improvement project. But if you're looking at a major renovation, you may want to see if there's another home to buy that already has the features you're looking for.
Remember that in addition to the cost of renovation, there's the hassle factor. If you're having your kitchen demolished, you'll have no place to cook, store food, or congregate as a family for some time. That's pretty disruptive. Granted, packing up and moving to another home with an updated kitchen is disruptive, too. But you may prefer that route if it makes more sense financially.
Say you're looking at a $40,000 renovation, and there's another home on the market that doesn't require any work. If that home is more expensive than yours, but it only adds $200 a month to your mortgage payment, buying it could make more sense than shelling out $40,000 at all once.
Keep in mind as well that while home renovations can increase your property value, you don't always get a 100% return on investment. Often, you'll only get a percentage of what you spend back in the form of higher resale value -- another reason it could make sense to move to a home that doesn't need work.
It's important to know your options
In my situation, paying to finish our basement made sense. After looking at homes that already had that feature, we saw that we'd increase our mortgage payments a lot if we bought a new home rather than renovating ours. (It's worth noting that in my neck of the woods, basements can be hard to come by -- and finished ones, even more so.)
We also decided on renovation because it wouldn't be all that disruptive. I work from home full time and I feared I'd be unproductive for weeks as contractors made noise under my feet. In reality, there were a few bad days when the jackhammering didn't stop and I had to go to a coffee shop to escape. Our contractors did a good job of sealing off the area so dust didn't bother us. And since our basement had previously just been used for storage, we didn't miss going down there.
I'm still glad we looked at other homes before finalizing our basement contract. And if you're thinking of renovating, it's worth seeing what's out there before you commit to a big project.
Our Research Expert
We're firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers. The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.
The Ascent is a Motley Fool service that rates and reviews essential products for your everyday money matters.
Copyright © 2018 - 2024 The Ascent. All rights reserved.