THIS IS MY 19TH POST ON UNDERSTANDING MONEY TOOLS
Homes: Renovation, to buy new, resale.
In this blog we’ll discuss briefly the benefits of keeping
your home and renovating parts of the home, or to buy new or resale in today’s
market. These are thoughts to go through before making important decisions.
The first question is what is my motivation, emotional or
rational? If you renovate your current home you need to ask, “how long do I
intend to live in this house”? With most renovations you won’t get your money
back in full. This varies
according to where you live in the US, and what you decide to renovate and to
what degree.
If your mind has decided a new home, this is probably one of
the best times to do so, pending that the economy of the country can move
forward. The reason for this is
that many of the large home builders are still buying developed lots and land
from banks that are in bankruptcy.
There are exceptions to this as in Boston, NYC, Washington D.C., parts
of southern California, North Dakota and Wyoming where prices have held up.
The builder is starting with a developed lot that he has
purchased from a distressed seller at $.20 on the dollar and then material
costs are down from the highs of 6-9 years ago. You can’t do better than
that! The homes come with new
warranties, build times of 4-12 months and you get to select the options you
desire.
The insulation and energy factors are so much better today,
including radiant barrier roof sheathing to reflect heat, blown in insulation,
insulation wrapped vents, energy efficient windows, etc. Your maintenance costs will be lower on
a new home.
Many builders offer built-in pest control systems like
“Taexx” tubing which is installed in the exterior walls and a pesticide company
can service the port on the outside of the home with the pesticide passing
through the wood studs on a regularly scheduled basis. Many builders offer “hot water loops”
so that you have quicker hot water no matter where in the house.
When looking at costs for a new home don’t forget that most
people will select options for the home that add on 12-20%. On top of that new home builders
normally don’t include exterior landscaping, or in warm areas the swimming
pools are at your expense.
If you renovate your current home, select which rooms and
how far you want to go with the renovation remembering you may not get all of
this money back. Normally, when
the work is completed you will only see 60-85% back as a financial improvement
to the home.
House “flippers” normally do the minimum amount of work to
make a house appear clean and improved so they can sell it; this is
different. The house “flipper”
will improve the yard and landscaping for “street appeal”. Inside the house they will paint and
re-carpet, but that is pretty much all, unless they are certain the market will
dictate getting their cost back plus a profit.
Many people start with the kitchens and bathrooms. Kitchen cabinets and appliances are
expensive. Does a person want to
update the plumbing, electrical, replace windows, carpet, tile, scratched
doors, etc. Where does one draw
the line? How about more
insulation in the attic? How about
the basement and finishing that area into part of the house? In many areas a finished basement is
not included in the square foot livable as of record. If this is the situation you will get a minimum return on
investment.
Many people who renovate love the area they live in and
their neighbors and don’t want to give that up.
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