The housing market is actually one of the most influential factors. During rough financial or economic times, people will often stay put, choosing to build on, renovate, or improve rather than buying a larger home only to find themselves trapped in a financial roller coaster. Although you can build equity in a home by adding on another room, installed new cabinets, putting down new flooring, and so on, most experts suggest you go through home improvement or property development projects for self-enjoyment.
For instance, if you want to update the kitchen or a bathroom, you want to make sure you do it for you. Then, as long as the improvements are not geared too much toward personal style, chances are the upgrades will add to the selling aspect of the home while increasing value. However, unless you are planning to sell right away, you will end up with the new rooms so you have to enjoy them.
One of the major mistakes made by homeowners is going all out on home improvement or property development projects only to put so much money in that they never get it back when the house is sold. Remember, you can update these and other rooms of the home for the purpose of building equity or selling at a higher price but you can spend so much that you never recoup the costs.
Let us say you plan to stay in the home for a year and then sell. As a part of the planning phase, you want to update the drab kitchen to make the home more appealing. Again, many people will dive in and before they know it, they have spent $10,000 or more on one room. Unfortunately, when they turn around to sell a year later, they may only get $5,000 value for the room. Therefore, when going through home improvement and property development projects, always make sure you make the changes so you can enjoy them while keeping to a tight budget so you can recover your money, and then some.
Typically, we recommend that you not improve a home to the point where the expected sales price would be more than 20% more than the most expensive property in the area. The reason is that properties can cap out maximum sales, shutting you down. If possible, keep any period fixtures in the home, which are usually big sellers, even if the home is upgraded. In addition, remember kitchens and bathrooms are the most important rooms of the house. Therefore, these are good rooms to invest in but keep choices neutral and within a budget. Finally, if you convert a spare bedroom to an office, home gym, closet, and so on, just make sure it can be converted back without much ado.