Whether you’re preparing to sell your home or investing in a property to flip, it’s important to be smart about renovations. While certain projects can definitely increase the value of the property you want to sell, there are some challenges to consider. Here’s a rundown of the mistakes you should avoid on your rehab project.
Underestimating costs
There’s nothing worse than getting halfway through your rehab project only to run out of money. A smart rule of thumb of when estimating costs is that everything will always cost more than you think it will. Be sure to allocate enough funds to each step of the process, and have about ten percent extra saved, just in case.
Choosing the wrong contractor
Before hiring any contractor, get recommendations from family and friends. Collect quotes from several contractors and research them online. Don’t just go with the first contractor you meet. The wrong contractor can make or break a project. Be sure to thoroughly vet them before signing on the dotted line.
Not having a plan
You may be ready to attack the walls with the sledgehammer, but don’t do it before you have a plan. Find out if there are any structural issues that need to be addressed before beginning anything cosmetic. You don’t want to have to tear out that new drywall you just installed in order to fix an issue with the pipe behind it.
Not getting permits
If your rehab involves more than just a few minor repairs, you need to check if any permits are required. Failing to get permits can net you steep fines, and cause problems down the line with your sale.
Using cheap materials
It can be tempting to always choose the least expensive materials, but your rehab project will suffer. Remember – you get what you pay for. If you want a quality job, spring for quality materials that will last.
Making the wrong renovations
If you’re rehabbing for an upcoming sale, you’ll want to consider what kind of return you’ll get on the investment. Some renovations can add sale value to your home, while others don’t. In general, upgrades to the kitchen, bathroom and curb appeal add value to potential buyers. However, spending on basements or pools isn’t always a great idea. When in doubt, check with your real estate agent.
Making too many renovations
In addition to making the wrong renovations, you don’t want to make too many renovations. Having the nicest home on the block isn’t necessarily great for your resale value. Depending on the comps in your area, you may not get the return you’re hoping for, even if your upgrades are fantastic.
Overestimating value
Lastly, when it comes time to sell, don’t overestimate the value of your renovations. We understand that you may have put quite a bit of time and energy into the upgrades you’ve made. You may be tempted to compensate by listing for higher than the comps in your area. Unfortunately, listing too high could make your home languish on the market and eventually you’ll be forced to reduce the price. Take advantage of the momentum you have at the beginning and list at the correct price. A professional real estate agent who is an expert in your market will be your best ally when it comes to determining just the right price.
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