I recently met with a homeowner in Alvin, and he had some great questions about renovations and home remodeling. After viewing the home, he pointed out to me his "to-do" list, which included a variety of projects. Floors, kitchen remodel, adding on by enclosing the garage, etc. I was quite impressed with his vision for the home.
Homes in this particular neighborhood were selling for about $85.00 per square foot in "good" condition. Now, I get asked this question frequently, "if I do _____ to my house, how much value will I be able to add to my house?" It's a hard question to answer directly, but it is a very important one.
Of course, there are a variety of factors that will determine what return, if any, you can get by upgrading or remodeling your house. These factors range from neighborhood price per square foot, cost and quality of materials used in the remodel, the current condition of your home, and time.
Depending on the market value of the home, you may put $20,000 in to the house, but you may not necessarily add that much value to it. There's a saying about, "buying the worst home in the best neighborhood." If a neighborhood is selling around $100/foot, and you can purchase the house at $80, then you could very well use the remodel to bolster its value. Of course, the materials you use will also play a role in how much value is added to the home.
But, at a certain point, you will reach a threshold, the law of diminishing returns. If houses in a neighborhood are selling on average at $200,000, and you spend $500,000 building a house, chances are you will not be able to re-sell for that amount.
And of course, timing is key. Right now, home values are on the rise, but it's hard to say what the market will do in the future. If home prices take a dip, and your remodel takes 6 months, you may end up losing some value of what you can sell your home for.
With all of these different factors, it's always best to contact a real estate professional, as I can help sift through the data and make the best decision for you and your family.