Home improvement, or home remodeling, is the process of renovating or making additions to your residential property. It includes projects that add value to your home, improve its energy efficiency or adapt it for a new use.
In the United States, spending on home improvement is on the rise. That’s primarily due to homeowners who are 55 and over, according to a recent report from the Harvard Joint Center for Housing Studies, which tracked the increase through 2017.
Some of the most popular projects involve adding square footage or improving functionality of your home. For example, converting a garage into a living area can add extra space for a family. Likewise, installing a smart thermostat can help you manage your home’s energy costs.
While home improvement projects can be expensive, they often pay for themselves in the long run. In fact, homeowners who make improvements can expect to earn a 70 percent return on investment, according to the RenoFi home remodel loan platform.
A key factor in the success of a renovation project is the quality of work performed. If you’re hiring a professional, it’s important to check references and make sure the contractor is licensed in your state. In addition, it’s a good idea to have your contractor provide a written contract that spells out all the details of the work.
Another consideration is resale value. If you’re planning to sell your home in the future, be aware of any improvements that might have a negative impact on its resale value. For example, if you install marble flooring in your bathroom, a buyer might not want to spend the extra money on that upgrade.
Unless you’re building a high-end home, don’t go overboard with upgrades that would only appeal to a select group of buyers. For example, converting garages to living spaces may not be worthwhile if most buyers in your neighborhood are looking for a single-family house with a basement.
The same goes for luxury upgrades, such as installing a $10,000 kitchen range or marble floors. If you’re selling your home, you’ll have to subtract the cost of those upgrades from its sale price and pay taxes on that amount.
In addition to increasing your home’s resale value, a renovation can also help you reduce your energy bills and qualify for tax credits. That’s especially true for projects that boost the efficiency of your home’s heating, ventilation and air conditioning system.
It’s worth checking with your homeowner’s insurance company to see what kind of coverage you’re already getting. Many companies offer discounts for home improvements or allow you to combine insurance coverages into one policy.
When planning a renovation, it’s always a good idea to ask your real estate agent or other expert for advice. He or she can point you in the right direction if you’re unsure about whether a certain renovation will add value to your home and, therefore, help you sell it faster.
When you’re ready to start a home renovation, it’s a good idea to set up a payment plan with the contractor. Then, you’ll know where your money is going and not be tempted to overspend.