Nov 172015
 

Something a lot of people don’t understand: Every dollar you spend on your home will not increase the value of the home by the same amount. It’s known as the Return On Investment (ROI). So here are four examples that you would not gain much value if you added them to your home.

 Pool Time1. In areas where they cannot be used year around, swimming pools don’t add much if any value, and to some buyers will only looked at as an expense they are not interested in. Do not install a pool as an investment. Only do so for your personal use and understand the issues when you go to sell. The only exceptions are in the warmer climates and upscale neighborhoods where many homes have pools. If it’s an above ground pool, you might consider removing it when you go to list your home (or at least offer to do so at your expense if potential buyers don’t want it).

 2. Any improvements that bump your home in value that exceeds the neighborhood around you. Prime example would be a complete kitchen redo with expensive tile floors, granite counters, & custom cabinets where the other area homes are vinyl floors and Formica counters with stock cabinets. While you’ll be the best showing home in the area, your ROI will be much lower than just a standard update that matches surrounding homes.

3. Large investments in rooms that may not be common in your neighborhood such as converting an attached garage to a family room or fancy entertainment center in the basement. If you eliminate a garage, be sure your parking area matches area homes. If most homes have garages you’ve not gained much by the extra room. And for adding value to your home a fancy basement doesn’t add much more value than just a plain finished basement. Your ROI will again not amount to much.

4. Any project that you borrow a lot of money to complete. That loan will come off the proceeds right after your mortgage and thus reduce your net considerably while again not adding dollar for dollar increase in value.

The best advice we can give you is before you invest a lot of money in your home with the idea of selling in the next few years, call The Derrick Team at 317-563-1110. We’ll be happy to do area comps to give you a rough idea on your possible ROI. We’ll be happy to offer advice on some simple low dollar projects that will help you in the long run.

 

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