June 23, 2017
We frequently get calls from homeowners considering a home renovation project. The questions are often quite similar: Does the project make financial sense? Will I get what I invest in this project back when I sell the home? Is it worth the disruption? If I can only do one part of the project, which should I do?
We have learned a lot from the years that we have spent building homes and helping sellers and buyers in and around Needham. That experience has informed us and helps us guide those embarking on a project. We would like to share what we have learned:
Is My Project Even Worth It?
Homeowners often want to know what type of return they will get on the substantial investment required in remodeling a home.
We tell our clients when they are considering putting money into their home, they should examine where they are within their own personal life cycle. They should consider how long they plan on being in the home and how much equity they have built up. These answers will dictate whether it makes financial sense to invest in a renovation project. If the plan is to move in the next few years, it might be harder to recoup the costs, particularly if the economy is at the end of an up cycle in the market and a correction in the real estate market seems likely.
Given the generally consistent strength of the housing market here, investing in your home usually pays off in the long run.
Once homeowners consider the underlying value of the asset, they can move to the next phase of the decision-making process, which is how the project will improve their quality of life. Sometimes better quality of life can outweigh some of the financial considerations of a renovation project.
Which Projects Provide the Greatest Return?
Kitchens and bathrooms are always smart places to invest in a home, because families use those spaces so frequently, and because buyers look for – and value – updated kitchens and baths. It is worthwhile to note that these rooms are the most difficult and costly to renovate in a home because of the space requirements of appliances and fixtures and the frequent need to re-route plumbing and electricity.
We also find that creating open space is a popular option, with the kitchen/family connection remaining central to that space. Adding a fourth bedroom is also very good for resale value, as is a master suite addition.
Improving the energy efficiency of a home is popular and will pay dividends in the long run, providing energy savings and in some cases tax credits. These improvements can also make a home much more comfortable, as anyone who has invested in replacement windows and doors knows.
How Important Is Design?
Homeowners often downplay the importance of design. After all, they might reason, my home is not a museum or a complicated building. We believe a good design is essential to any project.
We like to consider how the space will flow. Does the addition make sense, given the existing conditions? A mudroom addition onto the kitchen might add value, but if the garage is not connected to the space to allow for a good flow, it might not be a great idea to embark on this type of renovation.
What Else Do I Need to Consider?
There are additional considerations before starting a project: Will my family need to move out during the project and has this been factored into the budget? Is this a better project for winter or summer, or somewhere in between (because some projects will take longer at certain times of the year)? Should I hire a design/build firm or an architect and contractor separately, and what are the cost and process differences between the two? Hiring a design/build team can lead to a lower cost and quicker project, with less conflict between architect and contractor, but some people prefer two separate entities.
Homeowners should also have a firm grasp on the building process and the expected timeline. For example, obtaining permits may take longer for a project if you are adding on to the footprint of the home, and may require a land survey.
It also important to consider other expenses that may arise during the project. For example, there may be lead paint in the home that will need to be safely removed. Consider where plumbing and wiring is going to run and what walls apart from the project area may need to be opened. It may be necessary to re-side or re-roof the whole home, not just the portion being updated.
Perhaps most important, find a trustworthy partner for your project. You will be beginning a journey that will continue long after the project is done. Follow-up and warranty items may need to be addressed months or even years after the project is complete. Homeowners should be confident that the person or company they hire can deliver on time and on budget with a high quality product.
Renovation projects improve our surroundings and make life better, but it is easy to get overwhelmed when contemplating one. Most everything can be fixed with time and money, but the goal should be to know how much of each will be required before the first hammer is lifted.
Ryan McDonnell and Mathew Roth are co-founders and co-owners of Hawthorn Builders and Hawthorn Properties in Needham.