Fixing up a house can be profitable, but investing a few millions in repairs and upgrades may not add thousands of naira in value to your home. In fact, the average return on your remodeling investment is 20 percent or 30 percent less than you spend. Whether you profit from fixing up a home depends on the project, how well you manage costs relative to the resale value and your long-term plans for your home.
If your house needs immediate repairs such as electrical rewiring, plumbing works or roof repairs, determine the cost of these repairs first. Avoid making less urgent repairs until these big projects are completed. If necessary repairs alone cost more than you can afford, it may not be worth it to fix up the house.
Watch your neighbourhood
You don’t want to own the most expensive home in a neighborhood and you don’t want to own the most outdated. Either situation makes it very difficult to sell the home for its full value. Instead, you’ll see the most return on your investment when you make renovations that place your home on an even keel with comparable homes in your neighborhood.
Comparable Homes
To determine your return on investment, take a look at the market in your area. Have your home appraised and compare its value to the sale price of houses in your area that already have the improvements you want to make. Calculate the price at which you need to sell your home to recover your investment. If this value makes your home more expensive than the other comparable homes in the neighborhood, then you most likely won’t be able to get back the money you invest in a remodel.
READ ALSO: Industrial space, innovation seen repositioning Nigeria’s 41.5m MSMEs
Maximum Returns
Report shows that the highest returns come from replacing your home’s doors, garage doors, windows and siding. Also, the addition of a deck shows a high return. These outside renovations improve your home’s curb appeal and makes it more attractive to potential buyers. Indoors, a minor kitchen remodel offers the most lucrative return on investment — an average of 75 percent. The addition of an attic bedroom also shows a high return. Low cost projects, such as fresh paint, updated light fixtures and new grout, make your home look updated and are almost always worth the investment.
Dressing up
It’s likely that a designer free of emotional investment in the property can better dress a home for the widest range of potential buyers. If the budget allows, a professional stager — a growing field of certified and noncertified participants — might ease seller anxiety; many agents, but not all, also consider staging a specialty.
Think twice before assuming you can stage on your own. Chicago designer Philip Popwici was called in to help sell a midrise Chicago apartment, on the market for nearly three months with little interest, that along with several similar two-bedroom, two-bath units in building, was about to have its Lake Michigan views compromised by new construction. Staging introduced to potential buyers the appeal of the apartment exclusive of its view. It sold long before any of the comparable properties, some of which had to be pulled off the market.
Popwici, owner of Rooms Redux, a staging company catering to a clientele of condo and town home owners, helped carve out a dining space in an open floor plan with furniture positioning, essentially adding a room within existing square footage. He recommends hanging a mirror to mimic a window in rooms lacking natural light. He says bathrooms and master bedrooms are a good place to use limited resources. A few touches, like rich window treatments and candles, can make these rooms feel like a retreat for potential buyers.
He too emphasizes a good edit of life’s possessions.
Yet, while de-cluttered homes stand a better chance of selling, that doesn’t mean homes should be shown completely empty, the experts say.
Those working under a larger budget might consider trendy and appropriately proportioned rental furniture to fill the main rooms, says Baird & Warner’s Bailey.
At the least, says Rainmaker’s Duffy, stage small vignettes of tables, lamps and artificial plants to soften corners and add interest. Make sure to provide a chair or two, even inexpensive covered folding chairs and a simple covered table, for any buyer who might need to sit down and weigh her options — like making an offer.
Other Considerations
Fixing up a home involves more than just making a profit. If you are fixing up the house to live in it and enjoy it for several years, you can make upgrades without considering return on investment. However, if you’re planning on selling the house, you’ll need to consider whether you can recover your investment through the upgrades you make.
Rachel Koning Beals