You’ve got a limited budget. Here’s how to decide which home renovation projects you should tackle first — and why.
When it comes to home renovation projects, we all wish the sky could be the limit. Unfortunately, budgets usually determine what items get checked off the home improvement to-do list, and what has to be saved for another time. So how do you choose?
You should always prioritize maintenance projects first, says Kermit Baker, director of Harvard University’s Joint Center for Housing Studies. Whether it’s a leaky roof, broken siding or a malfunctioning furnace, these home improvement projects are vital to protecting your most important asset.
After that, you need to ask yourself why you want to do renovations. If your goal is to increase the value of your home, you may make very different choices than if you are trying to adapt your home to meet your needs for the next 10 or 20 years.Small Changes, Big Impact
If the goal is to increase property value, do your research, Baker advises. Ten years ago, a state-of-the-art kitchen or bath remodel was an easy way to add value to your home while simultaneously improving your quality of life. But with today’s housing market still not fully recovered, in some cases the reverse is true. “A high-end kitchen or bath remodel can actually price your home out of the market,” he says.
For those looking for home improvement ideas on a budget, consider making modest or partial upgrades. Replacing old elements, such as doors, windows and siding, in general yields a better financial return than bigger remodeling projects, according to the Remodeling 2014 Cost vs. Value Report.
The report also found that a minor kitchen remodel added 82.7% of the project’s cost back to the home’s value. That might include refacing cabinets, upgrading appliances, or adding new countertops or flooring, rather than gutting and replacing your entire kitchen.
If your aim is home improvements that add value, you may also want to choose projects that will align with current homebuyer trends, such as age-in-place features like a main-floor master bedroom or walk-in showers, Baker says.
Projects that add energy efficiency are also popular. When it comes to ENERGY STAR-rated windows, 94% of homebuyers want them, and 81% say insulation that’s of better quality than required by code is an essential or desirable feature in a house, according to the National Association of Home Builders’ What Home Buyers Really Want report.
If your goal is to meet your own needs for the future, focus on how long you plan to stay in your home and what will add the most value for you and your family over that time frame, Baker says.
That may include converting your attic or basement to a bedroom to accommodate a growing family, adding age-in-place features so you can grow old in your home, or investing in an energy-efficient HVAC system or appliances to lower your energy costs over time.
Finance or Cash?
As you zero in on which projects to pursue, keep in mind that financing is hard to come by these days, Baker says.
“Most homeowners are heavily dependent on cash for remodeling projects right now,” he adds.
Using cash means you have to be committed to a budget and be realistic about what you can reasonably accomplish.
“When you have financing, it’s easy to agree to an extra $30 a month to expand a project,” he says. “But when it’s cash out of your own pocket, every dollar counts.”