Homeowners Guide to Home Renovation on Lake Martin
By: Adam Yager, Realtor® – Lake Martin Realty
Your home on Lake Martin is an investment. Now, you want to spruce up that lake home for you and your family to enjoy. Maybe it is even time to sell, but your home needs some work in order to sell quickly and get you a return on your investment or even out from under that pesky mortgage on the home you and your family are not able to enjoy like you had once hoped.
One of the biggest mistake I see here on Lake Martin as an agent is homeowners “overdeveloping” or “overcapitalizing” a property. Look at the market. Just because you pour $20,000 – $100,000 into home renovation does not always mean you will see that windfall gain when you sell the home like you were hoping for. Strategic renovation is the name of the game. Even if you are not planning to sell anywhere in the near future, you or someone in your family is going to have to sell the home at some point. Someone needs to get your hard-earned money back.
Check out the following advice from one of the stars of ABC’s “Shark Tank”, Kevin O’Leary.
Renovating Strategically – Shark Tank Style.
- Look at the market first. What are homes in your area selling for? What features and structural aspects do they have that might have caused that home to sell for that price? What has the highest priced home in your area sold for and what features did it have? What was the lot like on this home? How big was it? What is your threshold? What can you put into your home that will give you any type of guarantee that you will get a return on that investment? Call your agent or find one who knows what is going on in the market.
- Don’t just get quotes. Yes, you want to get some prices, but don’t skip the references. Its not enough to do a cost comparison, because those prices can invariably go up. (Count on paying at least 20% over budget, by the way). You need to know how close that contractor generally comes to the quote, and the only way to know that is by getting the numbers of the last few clients. Read reviews of potential contractors and companies you’re thinking of hiring on sites that review contractors and other home improvement services. This is the purest form of word of mouth available.
- Do some, not all, of it yourself. Leave the plumbing and electrical to the pros, even if you have the skills, because doing it yourself could lead to some insurance problems down the line. But why not paint the walls yourself? Slap on some overalls and buy good-quality paint and brushed. You cut about 20% off your budget by doing the messy, fussy part of the renovation yourself.
- Do your own shopping. A lot of contractors charge by the hour, and a lot for those hours are spend standing in line at IKEA or Home Depot. Get a list on a daily or weekly basis from your contractor for materials you don’t need a contractor’s discount to purchase. Spend your evenings picking up those small items, whatever fits in your car – trim paint, hinges, grout. And make sure you hire someone who’s okay with you doing some of the shopping. Many contractors don’t like it because they make a good chunk of money staying on the clock as long as possible.
- Apply for the proper permits. You think its nobody’s business that you’re putting a kitchen in your basement or adding a big patio along the waterfront of your property. Think again. Licensing and permitting are a city’s way of earning a steady stream of revenue. Also, in the event of a fire or a mishap, illegal renovations might render your insurance claim null and void. So you may be just wasting money insuring your home if you have an illegal structure or renovation on the premises. Just make sure, if you open a permit, that the work is completed, and an inspector signs off on it. There is nothing worse than trying to sell a home with an open permit. Before you can close the sale, you must complete the score of the work outlines in the original permit, which could mean thousands of dollars in unexpected costs. If you don’t want to complete that work, have the drawings redone, then refile for a new permit.
- Pick your rooms. It’s nice to have a walk-in closet, skylights, and a gym in the basement, but for a guaranteed return on your renovation investment, the only certainties are an updated kitchen and a sparkling bathroom. Family rooms are important too if you live on any kind of waterfront property. The other big draws are the master bedroom and bathroom. Anything else on your wish list should wait or be axed. This is how people get into financial trouble – by over-renovating and committing to projects that don’t add value to the home but add only debt.
- Buy smarter. When it comes to building materials, your contractor should enjoy a discount of as much as 20 percent from affiliated stores off the prices of all materials. But where possible, skip retail altogether. Look for the leftover or discontinues stock for items like sinks and flooring. Attend auctions and scour online stores for unique materials that might come at a lower cost. Then buy, ship, and store until you’re ready to use them.
- Don’t skip the plans. A lot of contractors will tell you that you don’t need architectural plans to do your renovation. And in some cases, you don’t. but if you’re moving fixtures, tearing down walls, or relocating the toiled or any electrical work, then spend the money on an architect. They generally charge between 10 and 20 percent of the overall budget, buts its well worth it to avoid getting into bigger problems later. Finding out in the middle of construction that a fridge doesn’t fit or there’s not enough counter space in the kitchen is a budgetary nightmare. Architects not only help you visualize the finished project, they help you foresee potentially expensive problems so you can avoid them.
- If you have to borrow, you can’t afford a reno. In the last few years, the single biggest expense people have put on a line of credit is home renovation. Blame the flood of DIY channels, home improvement, and real estate programs, but banks have largely financed American renovation fever, at an alarming rate. Resist the temptation to go into huge debt to renovate your home. The interest you will pay over the years of servicing that debt will overshadow the gains you make with the renovation.
- Don’t over-renovate. Its called overcapitalizing when you spend more money on your house than the margin you will reap when you sell it. A colleague one bought a historic rowhouse. Hers was in the middle of tow other units. The outside units had upstairs bedrooms because the owners could simply insert a window on the side of each house. After adding a kitchen on the main floor and a basement suite, she looked into adding a second bedroom upstairs, which would entail building stairs, plus dormers on the roof. It would cost a minimum of $50,000. That is where she stopped short with her renovation plans. At the end of the day, as second bedroom would never compensate for the house’s other deficiencies: middle unit, no front yard, no parking (minimal view of the water in the case of Lake Martin). No matter how much money she spent on the house, at a certain point, it was what it was. She’d never get her money out of that house so she stopped pouring money into it and sold it for a tidy profit.
- Sell. Before you spend a dime on renovations, consider putting your house on the market as is, especially if it’s a seller’s market and you have a lot of equity in your home. But do a little remodeling and staging. In the bathroom, keep it simple: paint the walls, re-grout, install a new toilet seat and shower curtain. Replaces kitchen cabinet doors only, and maybe put in stainless-steel appliances- but buy them used and refurbished at a fraction of the cost. Sometimes that’s all you need to do to make the sale. (When it gets to this point, give me, Adam, a call.)
As always, if you’re going to sell, you need an agent advocating on your behalf and guiding you through this process. You may just need advice on what the market has been doing. Give me a call today. Check out other waterfront listings at https://www.lakemartinlocations.com.
Have a blessed week!
Works Cited O’Leary, Kevin. Cold Hard Truth on Men, Women, & Money. New York: Gallery Books; A Division of Simon & Schuster Inc., 2012. Print.