A Remodeling Investment Pays Off in More Than Dollars - Part One

Rules to consider to increase the “return” on remodeling

Many homeowners are surprised to learn that the equity in their home comprises a larger portion of their net wealth than the holdings in their stock market or retirement funds. Compared to conventional financial investments that rise and fall with regular frequency, housing has proven to be a relatively stable and sound investment that keeps up with inflation in most years and outpaces it in others.

2Invest-Abbott-Contracting-photo-by-Harry-Durham

Outdoor living space by Abbott Contracting – Photo courtesy of Abbott Contracting, photo by Harry Durham

Although few of us purchase a home strictly for its investment value, in practical terms it represents an asset that can pay high returns when it comes time to either refinance the mortgage or sell your home outright. Of course, a home that is well-maintained and offers up-to-date systems and amenities will have a higher value than a comparable home that is poorly maintained or lacking the conveniences and extra living space that today’s buyers want. Remodeling, then, becomes the key to protecting and enhancing the investment value of your home, not to mention its many other benefits.

2Invest-Ashworth

This remodeled kitchen was part of a whole house renovation by Ashworth Design & Remodeling – Photo courtesy of Ashworth Design & Remodeling

“What improvements will add the most value to my home?” To answer that question, it is important to understand that remodeling – and your home for that matter – is different from other investments that are primarily financial in nature. What’s unique about housing is that the “investor” or owner receives the immediate benefit of being able to occupy and enjoy their investment; i.e., live in it, all the while it is growing in value. Stocks and bonds don’t deliver on this aspect.

The longer you intend to stay in your home and will enjoy the new family room or whatever improvement you make, the more weight this factor contributes to your overall return on investment.

2Invest-CBJ-Harry-Durham

This interior renovation by Craftsmanship by John features open spaces and a remodeled kitchen. Photo courtesy of Craftsmanship by John, photo by Harry Durham

The other part of your investment return is the increase in resale value that the remodel adds to your home. Ultimately it is a professional real estate appraiser who will decide the financial return of any remodeling you do through the price he or she assigns to your home when you decide to refinance your mortgage or sell your home. The cold hard truth, however, is that real estate appraisals are more an art than an exacting science.

2Invest-LEC-Bath

This bathroom remodel by Legal Eagle Contractors features separate shower, tub and dresser areas. Photo courtesy of Legal Eagle Contractors

The price of your home will largely depend on the prices that comparable homes recently sold for in your neighborhood. The value assigned to the improvements you made to your home depends on a number of variables but depend heavily on the location of your home as well as its overall condition. Some remodeling projects lift the value of a home by the entire cost of the remodel and sometimes by even more.

GHBA_RCThe Remodelers Council of the Greater Houston Builders Association is an organization of remodelers and industry professionals. We are dedicated to the promotion of excellence and professionalism within the industry, and public awareness of the Remodelers Council. We achieve this through education, certification and service to the membership, industry and the community. Members of the Remodelers Council give back to the Houston community by participating in an annual charity project. The Remodelers Council holds an annual Garage Sale at the September Texas Home and Garden Show with proceeds going to their local charity project. To join the council or to find a professional remodeler in your area, please visit the GHBA website.

Leave a Reply

DON'T MISS OUT! Get Texas Home and Garden email updates. SIGN UP