Determining how much money to spend on renovations is an important part of the formula for gaining a profit when it’s time to sell. The idea, of course, is to increase the value of the property but overspending on a project or doing a project that isn’t necessary can severely hinder your success of gaining a profit.
You probably already know how much you want to spend and how much you can actually spend on renovations. But you must make sure that you use that money wisely and figure out what will give you the most reasonable payback in the future. The first step to take when calculating how much money to spend is to determine what areas in the house need the most improvement and which will give you the highest returns down the road when you will sell it.
When deciding what areas to improve, you must know that the two rooms that give you the most profitable return after remodeling are those of the bathroom and the kitchen. After the areas you decide to renovate are determined, the next thing that can be done is to calculate and approximate cost of the project. You should consult with a home inspector as well as your real estate agent before starting any renovations. This will help you to determine how much to spend on renovations and help you compare with the other home values in the neighborhood. You want to avoid making your property a much higher value than the rest of the block as potential buyers won’t want to purchase a high priced home in a lower priced neighborhood.
The best tip when determining how much to spend on home renovations is to stretch your budget as much as possible thus creating a greater potential in profits. See what you can do yourself, hire a professional to do what you can’t and don’t necessarily pick out the items that you think will give you the most profit.
Topics: Budget, Foreclosures, Investment Property, Renovation, Short Sale
