When it comes to managing investments, everyone falls into three categories: buy, sell or hold. And, like many homeowners, market conditions may have you in the “hold” column for now on what is probably your biggest single investment -- your house. But staying put doesn’t necessarily mean you have to stand pat. It’s a great time to invest in your home through renovations, both to make your house more livable for you today and more marketable when you do decide to sell. You just want to make sure you’re savvy about how you spend your home improvement dollar. Here are seven smart renovation moves to make now:
1. Talk to a REALTOR®
That’s right – you’re not selling or buying, but it’s still a good idea to talk to a REALTOR® about which renovations would bring the biggest bump in your home’s value. A REALTOR® who knows your neighborhood can tell you if granite countertops are crucial in your community, or if a second full bath is essential in your area. And if you like her advice, you can ask her to be your listing agent when it’s time to sell.
2. Don’t over-renovate
A rule of thumb: don’t spend the equivalent of more than 25 percent of your home’s current market value on renovations, or you could have trouble recouping your investment upon resale. Again, a REALTOR® can help you with this calculation.
3. Stick with the classics
The permanent fixtures of your renovation project aren’t the place to express your penchant for cowboy décor or the color fuchsia. Stick with traditional materials and colors for walls, floors, cabinets and moldings. Display your individuality through furniture and accessories, which you’ll take with you when you move.
4. Go where the water is
It’s classic renovation advice: spend your home improvement money in the kitchen and bathrooms, because that’s what wows potential buyers.
5. Get greener
And we don’t mean a fresh coat of avocado-hued paint. With both energy bills and environmental consciousness on the rise, it pays to invest in eco-friendly features such as energy efficient windows and appliances. Get great green home improvement ideas at www.energystar.gov.
6. Budget for surprises
Expect the unexpected. When building your renovation budget, it’s a good idea to tack on about 15 percent for those unanticipated expenses.
7. Use a home equity loan
A home equity loan or line of credit could be the smartest way to finance your home improvement investment. You’ll most likely get a better rate than you would from a personal loan or from using your credit card. This is because a home equity loan or line of credit is secured by the equity you have built up in your home, and the interest is often tax deductible.