Renovating a house can give you a great combination of increased property value and a sense of accomplishment, but there are certain risks involved that need to be monitored to avoid distress and profit loss.
Renovation - Getting Started
Renovation or construction?
These are just a few choices you will need to consider. To find out everything from choosing a block of land to construction loans, take a look at our FREE eBook: Building a Home
- Renovations involve disruptions.If you are living in the home that is likely to include a bunch of very challenging lifestyle situations that might be avoided by simply building a new home. Most builders will tell you that it’s actually easier to build a new home from scratch than it is to do major renovations on an existing place. The reason for this is you typically have to destroy before you can build. Destroy sounds rather severe, but that’s what you are going to have to live through while it is happening in your own home.
- A renovated old home is still an old home. With age things generally deteriorate, and a home is no exception. While there will be new bits, there will also be the old, and it’s likely to require more maintenance than a quality built new home.
- Unexpected things are to be expected when you are renovating. When a builder is quoting on a job he can only factor in what he can see. There are a lot of things that he could discover later such as termites, a structural defect, improper wiring or plumbing, water damage, issues with the soil or any other number of things that could cause a problem.So, with such a list of cautions, why would anyone even think about renovating? There are some good reasons.
- Creating increased value through renovations isn’t automatic. While you might like to have it set out in a particular way, someone else obviously liked it the way it was. As a result you don’t always gain market value by changing things. We look at factors affecting this in the eBook, but for the moment just keep in mind that typically more expense is going to be involved in changing things around from the way they are, so new construction is going to immediately have a head start as it is able to avoid that.
Where do you start?
Reasons to Consider Renovation
- Location.You may like where you are, or the ‘not quite right’ place may be in the perfect spot. If real estate is all about location, location, location; then it’s true for renovation as well! Often times the most desirable spots already have homes built on them, and none of them fully fit the bill for what you are after.
- Renovations taking advantage of a natural ‘value add'. If the property has great views but the house doesn’t take advantage of them, that’s a good reason for renovation and may even possibly increase the market value by more than the cost involved. While a purchaser could get the property at the old market value and have the same potential, those sorts of characteristics have tremendous emotional value. When a potential purchaser walks in and is awestruck by the views, the value has a way of creeping up to the maximum possible. That’s a different impact than just imagining what it might be like if something or other was done.
- Knowing what you like and what is lacking.When you have lived in a place for a long time, you get comfortable with certain aspects of the place but totally annoyed at others. Living in the place makes it easy to imagine how things would be different if renovations were done. That’s different than simply visiting a display home that doesn’t have your things in it and that you haven’t actually experienced in day to day life. And with an architect designed home you have a significant challenge to know what it will be like to live in when you only see it on paper.