Monday, July 9, 2012

TO INVEST, OR NOT TO INVEST? Part 1

        This week, I am addressing some very common home investments being made in the past 10 years.  These are largely related to homeowners that want to increase their resale value.  My post will be split into 2 segments: part one covering exterior investments, part two covering interior.  I do not claim to be an EXPERT in exterior work, but I am very familiar with these common investments and the effectiveness when it comes to resale.  Being a designer, I can easily recognize the magnitude of visual impact for certain types of investments.  Call it "Designer Logic".  When selling a home, there are two phrases that come to mind.  The first being "First impressions are everything".  The second being "Seeing is believing".  The first thing a prospective buyer will notice when home shopping is the VISUAL appeal.  If the property is not immediately visually appealing, it can poison the entire viewing, whether the home is in excellent condition or not.  If you are claiming your property to be worth more than your competition, it must APPEAR as such.  Seeing is believing.  I am going to give a break-down of my educated opinion is on these particular expenditures:  Landscaping, Stonework and pavers, Upgraded windows, Vinyl siding versus paint, Garages, and Backyard splurges.

1.  LANDSCAPING
While not my particular field of expertise, I can say that landscaping is EXTREMELY important to selling a home.  The front of the property in particular is critical.  "First impressions are everything".  Shoppers do not enter the home through the bedroom.  The first thing they see is the front of the house.  However, your exterior and lawn area do not need to be super exotic and complex to be effective.  Planting a few shrubs and floral bushes in strategically placed areas can make all the difference in the world, and may only cost you as little as a few hundred dollars.  It is a matter of proportion, balance, and color.  Good interior designers are trained on techniques to make spaces appear larger, or more intimate.  Inside or out, the concept is the same.  A little landscaping can go a long way.  Therefore, it is a wise investment when selling.

2.  STONEWORK & PAVERS
One investment trend right now is adding extra stonework to your exterior, and pavers instead of plain concrete to the driveway and/or walkway.  While it may indeed add curb appeal, this investment should be more on the conservative side when reselling.  Unless the entire interior is perfect, do not focus all your attention on excessive landscaping and stonework details.  Going all out on this may actually be to your disadvantage.  Stonework is often based on very personal tastes.  Your home's exterior needs to appeal to the masses if you wish to sell.  If the type of stone, the type of seam, orientation, and quantity get too personalized and unique, however beautiful it may seem, it may turn away several potential buyers.  A hint of upgraded stonework may be the perfect touch though, such as some rustic slate or cobblestone on the pathway to the front door.  It adds a bit of character without being overwhelming, and without being overly expensive.

3.  UPGRADED WINDOWS
One of the most common trends for resale, AND for new homeowners, is new vinyl windows.  These are usually double, but sometimes triple paned and most times are VERY costly.  Window sales reps will pitch the idea of a "40% reduction in energy costs", and the fabulous return on investment, but reports are showing that consumers have been disappointed.  Energy bills are not GUARANTEED to be reduced 40%, they are usually guaranteed for "UP TO" 40%.  Huge difference.  As for "Tax rebates", do your homework.  It is likely that you will be required to have a preliminary energy appraisal in order to become eligible.  There are indeed multiple potential benefits of new upgraded windows.  First, visual appeal, second noise reduction, and sometimes, but not always, significant energy conservation.  If energy conservation is your main reason for investing in new windows, consider alternative approaches such as upgraded insulation systems, which are less costly with the same or even better impact.  If you are planning to occupy your home for more than 15 years, then the investment on windows may be well worth it.  If you are about to sell, bear in mind that new windows are not usually at the TOP of a buyer's list.  Aside from the aesthetic appeal, they probably won't hold that much merit.  If it will put you out 12 thousand or more, consider another less costly option that will be sure to get you a return on your investment.

4.  VINYL SIDING VS. PAINT
A popular home investment is Vinyl Siding.  It usually simulates wood siding, but is SIGNIFICANTLY more durable with less maintenance.  If you intend to occupy your home for another 10 years or so, it is a fabulous investment.  It can also be good for resale, however it is not cheap.  If your current exterior is in good condition and you plan to resell, don't concern yourself with whether the buyer will need to replace it in 5 years.  That is their business and their expense. Also, if your siding is in decent condition, but not the most stunning in appearance, a new paint job can be just the ticket.  The return on this will most likely be significantly more than buying vinyl siding, even if you pay a professional paint contractor.  It is a good idea to consult with a designer on a project like this.  Choice of color can make or break this investment, so spend the extra hundred or two on a qualified designer.

5.  GARAGES
To some, the layout and quality of garage equipment is one of the most important in the home. However, this is usually in the case of the homeowner that has no immediate plans to resell.  A phrase that has become mainstream lately is "Kitchens sell houses".  I have never heard the phrase "Garages sell houses" and it certainly does not seem logical.  This should be considered when it comes to potential investments on a garage while prepping for resale.  Like everywhere else within the home, it is beneficial to have things neat and tidy, free of clutter to appeal to buyers.  It requires little to no expense to clean out one's garage.  However, some homeowners opt to furnish their garage with wall-to-wall in built in cabinets, and install rubber or vinyl flooring for a clean, sleek appearance.  That is great for personal use, but going out of one's way to be sure the buyer will have a perfect garage is not a logical investment.  Traditionally, garages are intended to be a space that contains a vehicle(s), protecting it from the elements, and from theft.  Today, they are often converted to game rooms, workshops, and lounges.  This is NOT what buyers are looking for, at least not the majority.  I agree that it is a worthwhile investment to put some basic shelves in, but don't go overboard.  It is more profitable to just clean out your garage than to buy wall to wall cabinets in order to hide your stuff from prospective buyers.

6.  BACKYARD SPLURGES
In a perfect world, we would all have island resorts in our backyard.  However, it is generally not EXPECTED by those looking to buy a home.  There are two backyard investments that I will address:  swimming pools and outdoor kitchens.

Swimming pools are not a new concept in upgrading one's backyard retreat.  In recent years though, studies have put many on edge when it comes to child safety, in relation to pools.  Laws are now being enforced to avoid child safety hazards, requiring fences that must surround the pool area.  The majority of home buyers either have, or are planning to have children, and may immediately consider a pool to be a DOWNSIDE on a potential home.  If there is a fence in place already, it usually does not make the best impression aesthetically, and if there is not, that is an unwanted extra expense to the home buyer.  This issue will vary based on demographic and property size.  Luxury estates with large yards are typically expected to have a pool and/or water feature of some sort.  Also, homes in very warm climate areas such as Texas, Arizona, and Florida, will basically be expected to have a pool.

Another increasingly common investment is the Outdoor Kitchen.  These also are now considered a necessity for luxury estates.  However, for 2-5 bedroom homes, it is still a personal indulgence, not expected by the masses.  For many, it is definitely a plus when buying a home, but the question is, at what COST?  If one is planning to sell their home, and decides to make some adjustments to the backyard, it can sometimes get out of control.  The cost of putting in a fully equipped outdoor kitchen with a gas range, fridge, sink(s), wine cooler and granite counters can be astronomical.  Unless you are selling a luxury estate, it is hardly worth the investment.  It is widely agreed that having an outdoor kitchen is nice, but honestly, how many prospective buyers are willing to pay an extra 50 thousand dollars for one?   Unless all your neighbors have one and you are in direct competition with them, put your money elsewhere.

STAY TUNED FOR PART 2

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