How should I spend my home-improvement budget?

Anymore, everyone is interested in improving their own home - just look at how many televisions programs there are dedicated to “doing-it-yourself”. Whether you are doing it yourself or hiring out the job, how do you decide what to spend your money on?

Given that the average American moves every 4 years, it is important to think about resale value when planning a project. Just because an improvement to your home costs $20,000 doesn’t mean your property’s value has increased by $20,000.

No matter where you live, kitchen and bathroom remodels generally have the best return on investment. Updated flooring (other than in bedrooms, carpet is considered pasé) also has wide-spread appeal. Anything which improves energy efficiency helps attract buyers. New windows and doors do just that and improve a property’s look inside and out.

Some improvements can actually cost a seller money. A swimming pool is a good example of an “improvement” which is considered a negative adjustment to value in certain areas of the country. Pools require additional homeowner’s insurance due to liability for injury/death, they are costly to maintain, and many areas of the country have water-use restrictions.

Over-improving a home can also be a bad investment. For example, a house located in a neighborhood with homes in the $250,000 range would not appraise significantly higher because it had lead-crystal chandeliers or a 6-car garage. Even if the home is “worth” $350,000, people looking for a $350,000 home want to buy in a neighborhood with similarly priced homes. Values are determined not only by the condition of the subject property but also the value and type of homes which surround it.

When planning, consider carefully whether or not your schedule and know-how will allow for the successful completion of your project. There is nothing worse than realizing that you have bitten off more than you can chew halfway through. Sometimes doing it yourself costs more money in the long run, not to mention the stress of trying to live in a construction site! Professional builders always calculate at least a 5 to 10% “contingency” when estimating a job for unforeseen delays/supplies so it’s a good idea to do the same in a do-it-yourself project.

I you are doing it yourself, utilize the knowledge and advice of the employees at your local home improvement center. They can be a wealth of information and save you a lot of headache and money in the long run.

If you are hiring a professional make sure to ask for references. Verify with your contractor whether who will be responsible to get any necessary permits from the appropriate government agencies. Don’t cut corners by trying to avoid paying for a building permit. Conforming to local building codes ensures that your improvements will be done properly. When you are selling, if the appraiser notes improvements that are not of public record, additional and sometimes costly inspections could be required to make sure that the home is up to code and doesn’t violate zoning restrictions.

People have varying tastes. Avoid doing anything very out of the ordinary to your home that cannot be easily changed, but express yourself. Purple paint never hurt anyone!

The things you will want to avoid are adding items such as hot tubs, suanas and swimming pools. While one of these items may appeal to you they may not appeal to a large percentage of buyers and do little to increase your homes value and may actually cause your home to sit on the market longer should you ever decide to sell it.

Remolding and improving your home is a great idea. Spending the money in the kitchens and bathrooms is a no brainier.

» DISCLAIMER: The information contained in this article on 'How should I spend my home-improvement budget?' is a collection of contributions by licensed mortgage professionals and is not the opinion of Broker Outpost LLC. Always consult a licensed professional before applying for a mortgage.