How To Know When A Home Remodeling Project Makes Sense

What Is The Value Of A Home Remodeling Project? 

You worked hard, saved up, and today you own your own home. It's a big part of the American dream! You love your home, and for a long time, it met all of your needs. Then one day, you woke up and your house doesn't quite fit your needs anymore. Maybe you're expecting a new family member, or your older parents are moving in. Whatever the reason, suddenly, you have a decision to make – do you plan a home remodeling project or move into a new one?

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In this post, we'll explore your options and help you to decide whether a home remodeling project is the best choice to meet your changing needs. We'll look at some of the things to think about to help you make an informed decision regarding remodeling vs. moving, some common remodeling projects, and what you can expect in terms of a return on your investment.

Start With Location

a prime location and emotional connection to their long-term home helped these homeowners decide to renovate and improve, rather than move.

When you are deciding whether to move or renovate, start by considering your current home's location. Does your home's location make your life easier? Are you happy with the kid's school? Do you have a manageable commute? Think about the places you typically visit, like work, church, and friends and family.

If your current location doesn't quite meet your needs, it should impact your decision to move; however, if your home's location works for you. The next step is to examine your house closely and whether it is feasible to remodel it to meet your needs better. Gauge your neighborhood and think about functionality. If making your home meet your needs better by adding an addition and renovating costs more money than your home is actually worth, it might be a bad financial decision.

And, Don't Ignore Your Emotions...

You need to factor your emotions into your decision. Often, you'll have an emotional connection to your home that no new home can match. You might have memories of starting your family and raising your kids, or maybe you inherited your family home from your parents. These are feelings you'll never have in a new home.

Check Compatibles in the Neighborhood

creativity can extend the life of your home. this blended family has three teenage daughters sharing a single small bathroom. the solution was a glam room, a dressing and makeup room, for them to do their daily preparations outside of the main bathroom.

Next, you'll want to figure out what the market will bear. Speak with a real estate professional and have your house appraised as is, then look at other houses in the immediate neighborhood that already have the improvements you're considering and what they are valued at currently or have recently sold for.

If you can complete your home remodeling project without closing the gap between your home's current and future value post remodeling, it's worth moving on to the next step. However, if your home is already at the top price range for your neighborhood, then you may not see any return on your investment.

New Home or Home Remodeling Project?

Finally, before you make your decision and pull the trigger, there's one more step. You need to look at your costs and compare the cost of moving versus your home remodeling project cost. Figure out the cost of a new mortgage versus a cash-out refi, or an equity loan or line. Make sure to consider interest rates and fees versus the costs of moving, including increased take-out and hotel stays.

Also, make sure to figure out the average cost of a house with the additional features you want in a similar neighborhood to your current location. Many homeowners are finding that it's cheaper to remodel their existing home rather than building or buying a new home that meets their changing needs in today's market.

When choosing to remodel, you're probably not thinking about selling your home, but it's still a good idea to consider the tastes and needs of future owners if you do choose to remodel. Remodeling Magazine does an annual report evaluating your return on investment for some home improvement projects. Their figures are based on regional variations. Here are some general examples:

Project Type and Return on Investment

transforming an existing home for more curb appeal can provide great joy to you, while helping prepare your home for future sale.

Replacing Garage Doors - 82.9% - 83.7%

Building a New Deck - 87.4%

Replacing Exterior Siding - 78%

Adding an Extra Attic Bedroom - 84.3%

Kitchen Update – Counters, Cabinets, and Appliances - 82.7%

Kitchen Update – Complete Major Remodel - 63.6%

Replacement Windows - 78.7% - 79.3%

Finishing the Basement - 77.6%

Finally, a big factor in your decision needs to be your family's quality of life. Many intangibles like your neighborhood, proximity to schools, work, nightlife, culture, and family should be considered. Resale isn't everything. Even if you stand little chance of recouping your investment when you sell, if you love your current home and it meets many of your intangible needs, it's ok to make the investment as long as you understand that it's an investment in your quality of life.

Work With Experts

If you're evaluating your finances, and you're still unsure, reach out to professionals for their expertise, advice, and perspective. Speak with contractors to get a better idea of the cost and possibilities for your remodel. For example, you may find that local building codes prevent an addition, but you can finish your basement, garage, or attic to create the space you need. If you're considering buying a new place, reach out to a real estate agent to get an idea of what's available and compare the value of a new home versus remodeling your current one.

If you're planning on refinancing to cover the cost of remodeling, or you'll need a new mortgage to purchase a new home, speak to your bank to run the numbers. The bottom line is whether you're remodeling or buying a new home to meet your changing needs, professionals can make the process easier and provide the knowledge and confidence you need to ensure that you're happy with your decision.

If you're unsure whether it makes sense to plan a remodeling project or want to explore all of the possibilities, give our award-winning design team a call at (608) 846-5963. We're always happy to talk to you about our process and show you what's possible!