How Estimating Home Renovation Costs Makes You a Better Investor
An important question a homeowner will one day have to ask oneself, especially when considering an appraisal, is whether or not to renovate their home. With any investment made, there is always the possibility of future return or loss.
How does a homeowner ensure their home renovation costs are a safe investment?
At ProWest Appraisal, we suggest a practical way of accomplishing just this is properly estimating home renovation costs. People who flip houses for living have often mastered the art of budgeting and calculating costs, because they know it’s the only way to be successful. The reality is if you can achieve renovating at the right cost, a homeowner could really better the value of their home later on.
When appraising a home there are many aspects of the property that are evaluated to obtain an overall value. Some important qualities of a home that are most commonly renovated are the bathrooms, bedrooms, kitchen, and backyard. Therefore using a bathroom (6 foot by 8 foot) as an example, it is important to see how much time and money it would take to fully renovate it.
Purchases to renovate the bathroom:
-Overhead fan: $40
-Plumping Materials: $100
-Free standing Tub: $250
-Shower Head: $25
-Boards, Screws, Cement: $150
Total Cost: $1,285
It important to look at these rough figures, and also factor in the amount of hours spent on labor, which could be an average of 35-50 hours of work. What is your time worth?
The cost of home renovation can be greater than your return depending on the purpose on your renovation. If you are hoping to have your home for five more years before the kids go to college, then that could be a renovation may be one worth making.
Before any renovation, consider all factors that would be essential in having a greater return in the future. Doing your research before any big project is also important. Be sure to not jump into any major home renovation unless you have the time and numbers to support it.