Evaluating Home Improvement Projects

Recently, we have had several clients ask for our opinion about making improvements to their houses. These projects have ranged from converting an attic to a finished bedroom to enclosing a porch to enlarge a family room. You may be faced with a similar dilemma and wondering if you will see a return on your investment. As you ponder your project in these challenging economic conditions, consider the following:

How long have you lived in your current house and how long do you intend to remain there? With the recent downturn in the real estate market, you must make sure that the cost of your project and the subsequent resale value of your home does not outpace the current real estate market.

Are your improvements in keeping with the other homes in your neighborhood? Does it make sense to add 1000 sq. ft. to a 1500 sq. ft starter home or should you consider purchasing a larger house in another area where the amenities you desire are already in place? Similarly, while those sleek professional kitchen appliances will surely transform you into the next Food Network TV star, will your prospective buyer be willing to pay for those upgrades or have you "overimproved" your kitchen for your current neighborhood?

Will the project add any livable square footage to your house? Adding space is an easy way to add value to your house. However, keep in mind that an appraiser does not assign the same value to the square footage in a basement as the square footage on the first or second floor.

Is there a way to update my house so that it is more attractive for resale but won't "break the bank"? If you aren't planning to live in your house for the long term and simply want to improve your surroundings for personal enjoyment, there are a myriad of things you can do to give your home a face lift. New appliances, new light fixtures, a fresh coat of paint and new cabinet hardware can transform an outdated bathroom or kitchen without depleting your nest egg!