Return On Home Improvements – Learn 4 Types Of Home Improvements To Help Maximize Your Return

Return On Home Improvements-R

The recent global downturn had a major impact on the way people perceive the real estate industry now. It is no longer a mine of exemplary return on investment. Instead, since the real estate bubble burst, it is viewed in a more balanced sense by people everywhere. One of the oldest methods of making profit out of real estate is making home improvements which would lead to an increase in the property’s market value. This can be simply termed as the return on home improvements.

So, what are the different types of home improvement projects and what kind of returns can you expect from them? The following are some answers.

1. Basic maintenance and repair:

This is the most basic form of home improvement that you can undertake on your property. Projects falling under this category would include fundamental requirements such as a proper roof, chimney, gutters, walls, foundation, plumbing, electrical systems etc. The reason why the return on home improvements like these is so high is the fact that these are things that potential buyers look at first.

2. Cosmetic:

Cosmetic home improvement projects would amount to what professional real estate investors call flipping. These are projects that are primarily based on beautifying the property in such a way that it creates an emotional connection with potential buyers. Projects included under this category are a quality lawn with landscaping, new paint work, clean windows and doors etc. This is possibly the second thing that potential buyers look at which is why the return on home improvements under this category are less than the first category.

3. Established region requirements:

Every neighborhood or region has a certain average that it is known for. When a potential buyer looks at houses in the region, he would expect it to conform to the neighborhood or region average requirement. An example of this would be your house having just 2 rooms while the majority of houses in your area have 3. Return on home improvements that are done to conform to the neighborhood or regional average can be high because it would make a drastic change on the valuation of your property.

4. Spurious projects:

As the name suggests, return on home improvements that are spurious, in nature, cannot be anything substantial and might even be on the negative side. The reason for this is that these kinds of projects are primarily owner lifestyle projects that may not be relevant to the majority of potential buyers. For instance, if you take into account something like a wine cellar or a sauna, then you can never be sure that a future buyer of the house will find it useful. Furthermore, he might even decide to take it apart and make something else there. Hence, return on home improvements that are more lifestyle based cannot be counted as anything more than null.

Effectively, as you can see, the quantity of return on home improvements can be set from extremely high i.e. fundamental projects to completely null i.e. luxury projects.

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