Tag Archives: return on investment

ROI: 99 Projects and a Bath Ain’t One – REMIX

Home Improvement ProjectsLast year I wrote about what projects brought the best return on investment according to the annual Cost vs Value Report. This year the report is out again but showed a couple of differences.

MidRange Projects:

Top 5 Best ROI Projects in Boston

1- Minor Kitchen Remodel 88.5% ROI

2- Deck Addition (wood) 86% ROI

3- Enty Door Replacement (steel) 80.9% ROI

4- [tie] Attic Bedroom Remodel and Siding Replacement (vinyl) 78.1% ROI

5- Window Replacement (wood) 77.5% ROI

Top 5 ROI Projects National Average

1- Entry Door Replacement (steel) 85.6% ROI

2- Deck Addition (wood) 77.3% ROI

3- Garage Door Replacement 75.7% ROI

4-Minor Kitchen Remodel 75.4% ROI

5- Window Replacement (wood) 73.3% ROI

Upscale Projects:

Top 5 ROI Projects in Boston

1-Siding Replacement (fiber-cement) 86.4% ROI

2- Garage Door Replacement 77.8% ROI

3-Siding Replacement (foam-backed vinyl) 77.6% ROI

4-Window Replacement (vinyl) 76.4% ROI

5- Window Replacement (wood) 74.7% ROI

Top 5 ROI Projects National Average

1-Siding Replacement (fiber-cement) 79.3% ROI

2- Garage Door Replacement 75.2% ROI

3-Siding Replacement (foam-backed vinyl) 71.8% ROI

4-Window Replacement (vinyl) 71.2% ROI

5- Window Replacement (wood) 68.4% ROI

As you can see, the more you spend does not mean the more you get back. Before beginning any home improvement project it is important to consider the purpose for the project. Yielding a high return on investment is good to consider, but if you have no intention to sell anytime soon, there is no reason not to make a house your home. Once you have decided to pursue a project make sure to use the right contractor, no matter the project, the right contractor will save money in the long run.

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Home Improvement Projects Big or Small Need the Right Contractor

Like many people, I love watching home improvement shows on HGTV. The designers and contractors are fun, happy, and always satisfy their client. They make it look easy and affordable to tackle any home improvement project. The trouble comes when the next show is a home improvement “gone wrong,” showing how doing a simple project wrong can cost much more than never doing the work to begin with. But some home improvements cannot be held off for long and ultimately need to be done.

Apart from auditioning to be on an HGTV show, what do you need to do to make a renovation your home? You can go to Home Depot or Lowe’s and see what it would take to do it yourself. If DIY is not an option, contact a contractor. The usual ways to find a contractor are to ask friends or colleagues and search Yelp or Angie’s List. Not many people think to ask their Realtor. Even if it’s been years since you’ve bought your home, your Realtor has a select database of all kinds of contractors they and others in their company have used and your Realtor would be happy to help you find someone.

Once you have a name, don’t just hire them, interview them. In fact, it would be better to have more than one name.

A few key factors to look for in your contractor:

  • Make sure they are licensed, bonded, and certified. If your home was built before 1978, a contractor has to RRP (repair, renovate, and paint) certified. Since homes before 1978 may have used lead paint, certified contractors will know the new regulations and guidelines to make home improvements safely.
  • How long can you live with a blue bathroom?Trust your contractor. This is why I recommend interviewing a few contractors. When I say, “interview,” I don’t mean pick the one with the lowest quote. They may say the home improvement will cost X and be done by Y, but there may be delays and obstacles, making the price XXX and done by “who knows when.” Ask about other similar projects they have done, how long it took, etc. It’s crucial to feel comfortable and trust your contractor. This way if something does come up, you will listen to them even if it’s not something you want to hear.
  • Ask about subcontractors they use and research them. Certain home improvement projects will require your primary contractor to use subcontractors (plumbers, electrician, etc.). Like your Realtor, a contractor has spent years to develop a trusted list of vendors that work in every aspect they may need.

Keep in mind if this project is for your enjoyment or resale value. If your home improvement project is for resale proposes, consult at Realtor to find out how much value it will actually add to your listing price. Also read what projects get the best ROI before starting a home improvement project.

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Is a Fixer-Upper For You?

Many people buying a home for the first time believe they will know what home to buy because they will fall in love. This is somewhat true, but as the saying goes “you can’t judge a book by it’s cover.” In competitive real estate markets, love will take some work and the question you have to ask yourself is how much love (and work) are you comfortable putting in?

Every homebuyer needs to be flexible in certain areas of their criteria. In an ideal world, a buyer finds the perfect home in the area they want and the house is move-in ready (or a turn-key property in realtor speak).

A fixer-upper may be an option to consider

If location is the most important factor in your search and nothing is available in your price range, you might want expand your price range. I’m not only advocating looking at higher priced properties, but also those at a lower price point, which will require some level of renovation. If you find listings matching all of your other criteria but are rough around the edges, take a look and keep an open mind to the possibilities. In competitive real estate markets, the properties with more than the average days on market tend to be fixer-uppers. One of the biggest positives of buying a fixer-upper, is your home can reflect your tastes instead of the seller’s. Another positive is you have a better opportunity to negotiate since many buyers do not want to put in the time, money, or effort for renovations. Less competition from other buyers means more leverage when it comes time to negotiate. Once you have purchased the property and made improvements, you will see a much quicker appreciation in your asset’s value. The improvements do not have to be top-of -the-line renovations to see a quick appreciation, many simpler projects can bring a strong return on your investment.

Keep in mind renovations are not for everyone. Unless you plan to do a renovation yourself, you can never guarantee how long the work will actually take. Projects can be delayed for all kinds of reasons but the worst case scenario comes from the fact not everything can found during inspection and what can start as a simple project can turn into something major. A dream home can turn into a money pit, but a looked over fixer-upper, can be the home you never knew you always wanted.

Buying a home is an emotional process. Like in dating, don’t be discouraged by thinking all the good ones are taken. Sometimes taking a second look on an option that doesn’t seem perfect might become better than what you thought you wanted.

If you are interested in searching property for sale, contact the Realtors of Matthew and Alisa Group.

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Pricing a House: The Difference Between Sold Listings and Old Listings

This is a great time to sell with limited inventory on the current sales market and the mortgage rates at all-time lows. In fact, every news outlet is saying how the housing crisis is in remission, so why hasn’t your home sold yet?

Let me give you a frame of reference: if you have had a property on the market for longer than 2 months with no serious interest, your property can be considered stale and will be harder to sell. Keep in mind this is not true for all properties. Certain properties that fit into a niche market (multi-million dollar mansions, horse farms, etc.) or have problems (in areas with lots of construction, awkward layouts, etc.) will take longer to sell than turn-key properties. If your property doesn’t need improvements and is in a sought after location, why didn’t your house sell when it first came on the sales market?

Our society is becoming increasingly visual and tech-savy and people want to see high-quality photographs. Do your listings feature plenty of pictures of the property? Are the pictures high-quality and shot by a professional photographer? Is your listing mobile friendly so buyers look up your listing on their smartphone or tablet? If you answered “yes” to these, then more than likely it’s because the price is too high.

Pricing a house to sell in the current sales marketThere are many reasons a property doesn’t sell but more often than not, not pricing a house to sell in the current market is the factor for a listing to go stale. If you feel this is wrong, let me ask you, did you come up with a price based on the formula: I paid X so many years ago and put in Y so the price should at least be (X+Y)+Z with for inflation and appreciation? It’s an easy formula but it is the wrong way to go about pricing a home. One reason is that your ROI is never equal to 100%. There are several home renovation projects to increase its value, but none of them will give you back exactly what you put in. Another reason this formula is inaccurate is that the market works much differently and a property should be priced to sell for the current market. Worst case scenario is that your area took a hit in the housing crisis and it hasn’t recovered. If you bought it for X at the peak of the market, chances are you are not going to get it all back when you want to sell. Best case scenario, you bought low and held onto the property for years and now you can get much more than what you paid and put in.

“Is my property priced too high?”

If you and your Realtor are doing everything to market your property well, check the sales activity in the local market. Is there a lot of activity? If there is a lot of activity in your sales market but your property has not had any interest, this is a good indication the price is too high. Pricing a home is not a guessing game, have your Realtor provide a comparative market analysis and look at the data. This will show you what similar properties to yours have recently sold for and you will also be able to see how long they were on the market and compare the list price to the sold price.

If you are still saying to yourself that you know your home is worth the price you are asking, let me ask you this: do you really want to sell your home? If your answer is “only if I get the price I want,” you don’t really want to sell and chances are you won’t sell. If your answer is “yes,” then it needs to be priced to sell in the current market. If you want to get the best price, price the home to sell to begin with. This will bring a lot of traffic and interest right away, which is the most critical time for any house on the market. The properties that are getting close to asking or above asking are priced well at the start. If the property is priced too high to begin with, it will sit. To generate renewed interested, you will need to drop the price. Depending on how long you have it on the market and how many price reductions you make, you may end up selling for less than you would have if you had priced it well to begin with. In the meantime you have lost money because of the holding costs incurred through property taxes, maintenance, and mortgage payment.

Pricing a house too high for the current sales market

versus

Pricing a house to sell in the current sales marketIf this doesn’t move you to reconsider your strategy when pricing a house, see what your asking price gets you in the local market. Are there more bedrooms? New renovations? Landscaped outdoor space? These are what buyers are expecting at this price and if your property falls below their standard, buyers are not going to be interested.

If you are in the market to sell a home or would like to know what your property is worth in the current sales market, contact the Realtors of Matthew and Alisa Group.

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Setting the Stage to Sell Your Home

Staging to sell your propertyOnce you put your home on the market, you have to come to terms with the fact that this will no longer be your home. Once you’ve accepted this, you can start to see it how a buyer would see it. The first step is to get all the clutter out and depersonalize. If you were buying a home, you would want to see a property free of all the previous owners’ personal items. People don’t want to be reminded that they are going through someone else’s home. You want to inspire the buyer with an unassuming canvas, something a buyer can look at and say, “This works, but I can see how I can do a little more.”

Hiring a professional stager is one of the best investments you can make when selling a home. If you are living in the house while it is on the market, a stager can help you by advising how to make the space appeal to a buyer while keeping it functional and livable for you. And if you have moved out and taken your furniture with you, staging a home can give life and warmth to an empty space. Unfortunately buyers do not always have the vision necessary to see themselves in a house. Staging allows them to see a house as their home.

You know your home. You know the time of day where the sun hits a room just right. Highlight the features that makes your home unique. Make sure to capture what makes this home so special and how it can make someone else just as happy to call it home.

Fix or upgrade the features that will turn someone off. Are the fixtures in the bathroom out of date? Change them to something more current. Are the cabinets in the kitchen still white with a wood border? Simply switch them out. Doing those little changes will add value to your home. If a buyer comes in and only sees what they will have to change and the work they will have to do, it can either turn them off completely or cause them of give a lower offer.

Many buyers these days like to come into a property and see little or no work needs to be done. Features like a landscaped garden can seem like a great highlight, until a buyer starts thinking of all the work and money they are going to have to spend to maintain it. Realizing these ahead of time, you can turn what some see as a negative into a positive. Offer helpful tips to show it’s not that difficult to take care of a garden or leave the name of gardeners that can help maintain it.

These are just a few ways to set the stage to sell your home. If you are interested in learning how we can help sell your property, contact the Realtors of Matthew and Alisa Group Real Estate.

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ROI: 99 Projects and a Bath Ain’t One

What Projects Bring the Best Return on Investment

When starting to do any renovations or improvements on a property the most important factor to consider is who or what the work is for. If this a property that can be called home for generations, then go personal, build it to fit your style, something that you want and will want for years. If the work is needed but in a property that you will out grow within several years, consider a practical approach. The more personal style shown in a project, most likely the less of a return on investment (or “ROI”) you will get at resale.

The cost vs value report 2011-2012 surveyed 35 remodeling projects over 80 cities that range from mid-range to upscale projects. According to this survey, replacement projects had the better return versus remodeling projects and mid-range projects recouped their costs more than upscale.

The top 5 projects that showed the best return at resale. Remember this is the national average and results may vary depending on location.

  1. Fiber-cement siding. This immediately improves curb appeal and 78% of the cost is recouped for a mid-range replacement.
  2. Entry door replacement. Again improves curb appeal and 72.8% of the cost is recouped for a mid-range replacement.
  3. Attic bedroom. This is a bigger project that adds an extra bedroom and bathroom and stays within the home’s original footprint. 72.5% of the cost is recouped. On average this project can cost $50,000 and has a value of $36,000 at resale.
  4. Minor kitchen remodel. This is a project that doesn’t have to cost very much if you think of it as a facelift. Replacing cabinets, hardware, countertops, and old appliances with energy efficient models can recoup 72.1% of the cost.
  5. Garage door replacement. 72.1% of the cost is recouped but this is a project that can vary in price depending on the home and the materials that have to be used. For a detached garage, an uninsulated door is fine. But if the garage is part of the house or rooms exist above the garage, spending more for an insulated door is necessary. Either way this project again immediately improves curb appeal.

The projects with the least return on investment are additions such as a sunroom or master suite. Remodeling a home office or bathrooms are also least likely to see a return on the dollars you put into the project, the reason being more people would want an extra bedroom rather than a home office and bathroom projects rank so low due to the expense. Taking a smaller bathroom and turning it into a spa also takes square footage away from other areas of the home and changes the original footprint of the home.

Renovations That Showcase Personality May Hurt ResaleResale is just one factor to consider when doing home improvement projects. If this is a home you have no intention of selling, making it what you want is more important, within reason. If your home is on top of your neighbors, you may want to tone down how much personality you show on the exterior of your home because it may make it stand out (and not in a good way).

Visit the Cost vs Value Report to see the full data and learn more about cost vs value. On the site, you can compare the data nationally, regionally, and by city.

To find your next project or your next home, contact the Realtors of Matthew and Alisa Group Real Estate.

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