Care with Renovations Essential in a Soft Real Estate Market
Tuesday, September 2nd, 2008 Subscribe To Our Feed
If ever there was a time to be careful with home rehab, it is right now.
With a real estate that is flat or declining in most areas, home owners need to exercise caution when undertaking home rehab to their home, whether they are just looking to improve the liveability of the home, or as a means of making a profit when the property is sold.
renovations
There used to be a time when the strong growth in real estate would result in a “profit” on just about any home improvements undertaken. The fact that in many cases the perceived “profit” was actually a loss, was hidden by the general rise in house prices. In other words, while the sales price of a property was more than the purchase cost plus the home rehab costs, in a lot of cases the profit would have been greater if the home rehab had not been undertaken in the first place.
Not any more. In the current real estate market, unwise home rehab can end up losing home owners many thousands of dollars – a heart-breaking scenario when many home owners are already taking a financial hit from soft real estate prices.
property
In particular, care needs to be taken with your choice of decor. Your property should appeal to the widest possible range of buyers if you want – or need – to sell. Choosing neutral color tones and themes is vital to ensure you don’t diminish the long-term value of your property.
But that doesn’t mean that your home will look bland or featureless. You can use neutral tones for walls and permanent floor coverings, and then brighten up the look of the rooms with colourful rugs, drapes, wall hangings etc.
house flipping
So how do you minimise the risk of your home rehab project turning into a financial fiasco, if you are involved in house flipping? Careful planning, particularly before you even choose a property to buy, is essential. In spite of what the overall real estate market is doing, there are pockets of the market which will be moving in the opposite direction to the overall market. Make sure you have selected a market segment which is showing positive growth potential before even considering individual properties to buy.
Home Improvements can vary greatly in the value added to your home. Some projects, such as adding a swimming pool, are known to generally add less value to a home than they cost. Others, such as repainting or landscaping, are much more effective at adding value in excess of their cost.
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