REAL ESTATE INVESTMENT + HOME RENOVATING TIPS
When designing spaces for clients, I'm often faced with the task of determining the priority of a client's specific taste versus their intention to sell their home. Even in my own homes, I'm constantly struggling between designing a space my family will love and keeping the overall value for resale. Anyone who has ever sold a home knows that when you list, you'll be asked to remove a ton of your personal belongings (or you should be asked to, if you're not asked to, get a better realtor). The reasoning behind this is to allow your potential home's buyers to imagine themselves in the space. Removing family photos and your framed concert t-shirts is a start, but if you're looking to make real money from the sale of your home, the end-buyer should be in the back of your mind the entire time you live there. That means you'll need to determine the type of person who would want to live in the home after you. If your current home is a 700 square foot condo in the Central Business District, you'll attract a different type of buyer than someone renovating a suburban tract home. Keeping this in the back of your mind allows you to make smart updates that will enhance your home's value, rather than investing in changes that won't appeal to your end-buyer.
The best way to make sure you're making super smart choices that will benefit your long-term goals is to work with a designer who has experience in home investment / flipping. (For instance, someone like me!) Of course, not everyone needs an actual designer to assist them. Lots of people have enough vision and experience to create their own designs. For those people, I've enlisted three of the top real estate investment professionals to provide some advice. Below, you'll find their answers to the five most frequently asked questions about home investment and renovations. Keep in mind that every market is different, so some of their advice may not apply to you. Before making large investments, I always recommend consulting a local real estate professional to help you determine if your money is being well-spent. And of course, if you need design assistance, my Custom eDesign Package includes DIY project tutorials and specific advice to save you money. Now let's get to the juicy part!
MEET THE PROS
MEET THE EXPERTS
Home City/State: Leawood, KS
Job Title: CEO
Company: Medical Dev Mn & Schraeder Family Partnership
Where you've seen him:
DIY Network's Bargain Mansions
Ward is a part of the Bargain Mansions team, assisting his daughter, Tamara, renovate six homes in the Kansas City area.
A natural handyman, Ward has been building and fixing things all his life. Ward helped his father rebuild his grandfather’s ranch house. When Ward and his wife bought their first home in Davenport, Iowa, he spent many weekends rebuilding it, teaching his children the value of hard work along the way. Ward loved the process so much that he remodeled two more homes. He started buying commercial buildings and houses that needed remodeling, then renting them out when they were finished. That led to commercial construction. When he started developing and operating hospitals, his work morphed into the construction of massive medical projects, creating a thriving business in medical center management and development. His business philosophy is to find something broken, fix it, and turn it into a success.
Home City/State: St. Paul, Minnesota
Job Title: Certified Residential Real Estate Appraiser
Company: Carrigan Appraisal Services
Where you've seen her:
Popular Home Improvement Blog at natknowshouses.com where she dishes out advice and inspiration for conquering your own home remodel.
Nathalie is a second-generation real estate appraiser in the Twin Cities. She has been appraising for 12 years and working in real estate for 15. Houses are her passion and she could talk about them all day! She's currently remodeling a 1970's ranch in the Twin Cities with her husband, two girls, and a sweet black lab.
Home City/State: Nashville & Franklin, TN
Job Title: Realtor
Company: Village Real Estate
Where you've seen him:
Born and raised in Nashville, Joe has been a Realtor for 11 years, with a wide range of both urban and suburban clients — from East Nashville to Franklin and everywhere in between.
|| Editor's Note: Joe is actually Teri's Real Estate Agent of choice. If an investment opportunity arises, he's her first point of contact to bounce ideas off, research opportunities, and seal the deal. ||
Q + A
Teri: My clients and friends often ask me if I'm a "house flipper" and I've always been a little hesitant to answer that. In some ways, I guess I am. I see my home as an investment and do intend to make money off of every real estate investment, but I also live in my home during my renovations for a minimum of three years. Do you think there's a difference between someone who flips houses and a homeowner who makes calculated choices regarding their real estate investments with the intent of selling for profit? If so, what are the differences you see most often?
Ward: There is probably a minor difference in that specific question. A homeowner with the intent to flip might make a more emotional choice because he/she likes something that they may wish to use or maybe just a different colored tile. A flipper would look at this and maybe say "that it is current and attractive" [or even decide something is] maybe not their absolute choice but of a quality that it won’t detract from the value of the home. Therefore leave it alone.
Nathalie: There are absolutely differences. The majority of the houses I see that are flipped, are generally flipped quickly and for the least amount of money possible. The most common flips in my area are in the entry-level budget range and a contractor or handyman will come in and rip everything out, install laminate flooring, stock cabinetry (usually white) and stainless appliances. Sometimes they will add some tile to give the home some character and bump up the appeal a bit.
There are some contractors in my area who take their time with flips though, and I am always thrilled when I have an opportunity to appraise these homes. They spend a little more time, money and effort making a home truly beautiful and interesting. They think about function and how a family would use a home, and add things like built-ins, maybe a stone fireplace, some extra tiling, beams, higher quality millwork.
When a homeowner is updating the home they are living in, they are generally thinking about their own style as well as what may add value, and they will often research materials and brands before purchasing. Finishes are a little more refined. I usually see more color on the walls. There's just more thought and care put into the home.
Joe: A savvy homeowner — even with no concrete plans to sell in the foreseeable future — will keep in mind their house may not be their “forever home”. Any major renovations or permanent decor can reflect their own taste, while also being modular enough to change in the event of a sale (repainting, replacing fixtures, etc). Someone who’s in it for the long(er) haul should think like a flipper but focus somewhat less on pleasing others. Conversely someone who flips houses should definitely look for current trends while avoiding anything too taste-specific.
Teri: For homeowners who intend to sell within the next five years, what projects would you encourage them to tackle? Are there any areas within the home where the homeowner can make inexpensive updates that really add value?
Ward: The master bath and kitchen are almost equal in both resale value and appeal. If they are not updated, they will prompt a significant discount in the value. Inexpensive improvements can depend on how handy a person is or their willingness to tackle a project. Painting and flooring are both something that can be tackled by someone with minimal experience.
Nathalie: Five years is a long time in real estate, but I would suggest working on things as your budget allows. Paint goes a LONG way in making a home look fresh and clean. Windows are a big update, but if you know a handyman, you can replace a few windows a year and it's really not too expensive that way. Every home is so different so it's hard to say, but think about what your home really needs, and do what you can in that area. Is the kitchen super dated? You can update almost any kitchen without spending a ton of money. The kitchen is the most important room in the house. Also, cleaning is huge. If you can't spend a dollar but need to sell your house, scrub it from top to bottom.
Joe: For a 5-year plan, it’s best to keep in mind the surrounding neighborhood: you don’t want to OVER improve in relation to the potential future values nearby. You also don’t want to be the only home missing certain features. Examples: if surrounding home all have lovely outdoor living spaces, yours should too. If most in your older area have newer roofs, yours should too.
Teri: What are some of the common missteps you see homeowners making that adversely affect their home's resale value? How would you recommend they avoid them?
Ward: It’s the age old adage of location, location, and location. No amount of home improvement can fix a bad location. I personally avoid high traffic areas, tract housing, and poor school zones. Do your research which means look at lots of houses until you find one with solid bones in a good location and buy it at the right price. Money on real estate is made in the buying and not necessarily the selling.
Nathalie: Two things really stand out to me here- painting oak and replacing flooring with the cheapest possible option. Flooring is very personal I think. There are so many options. Some people hate carpet, some people love it. Some people want wood plank flooring and some want something that won't scratch ever. If you absolutely need to replace flooring before you sell, that's fine, just do some research on what your market currently demands. If your flooring is in decent shape, skip replacing it and price your home accordingly.
Painting oak is another big one. Unless you really know what you are doing, it usually doesn't look good and can quickly date your home. Instead, replace hardware and update wall paint colors.
Joe: Going back to the first question, a big mistake is to overly personalize a home with no plans to undo upon selling. Like crazy colors? Be prepared to paint before listing. Like family pictures and offball art covering most surfaces? Develop a storage plan for them. A homeowner should also keep an eye on the level of finishes in surrounding/similar homes. If you’re in the type of neighborhood where higher-end surfaces, fixtures, and flooring are the norm, avoid laminates, plastic shower surrounds, etc.
Teri: Real Estate and home improvement trends are constantly changing, creating a big debate in the design world regarding trends vs. timeless classics. If a homeowner intends to sell their home within five years, would you encourage them to install trendy materials (like shiplap or colored glass tile) to be competitive or stick to classics (like wainscoting or subway tile) for more long-term appeal? What are some of the current trends that you predict will decrease in popularity over the next five years?
Ward: I would stick with more common themes and earth tone paints. I think big outdoor cooking areas will become less popular and don’t add much of anything to the sale or increased value of the home.
Nathalie: I think it kind of depends on the home. My personal opinion is that homes will retain the most value if the finishes remain true to the style of home. If you live in a mid-century home, don't try to turn it into a farmhouse. Likewise, if you own a brick colonial, sticking to classic finishes will benefit you more than modern or mid-century finishes. Some people like many different styles and that's okay, but keeping your home cohesive is the best thing you can do.
As far as trends go, I am seeing builders step away from the white and greige a little bit more. I predict warmer colors and finishes over the next few years. I keep thinking the farmhouse style will phase out, but it's really holding on. I don't think it will be as popular 5 years from now though.
Joe: As nobody can predict how long a trend or fashion will last, it’s probably best to keep your timeline in mind when selecting design features. Fixing up to sell in 90 days means you can probably focus on what people like TODAY. But you’re in a 3 or 5 or 7-year plan to eventually sell, you might want to stick with the basics. Example: some of the trendy glass tiles from 10 years ago already look dated to many buyers. Who knows what the reaction to shiplap will be a decade from now?
Teri: Lastly, what is the most important decision a homeowner can make that will increase their likelihood of turning a profit when they sell their home?
1. Curb appeal
3. And don’t get emotionally involved in the buying process. Don’t be afraid to drop the price 20 to 30%. The right Real Estate agent should be able to help.
Nathalie: If you are shopping for a home to buy and you want to build equity, don't buy the nicest house on the block. Buy a house that needs some love. Sweat equity is going to give you the biggest ROI (return on investment). If you currently own a home and plan to sell, the best thing you can do is keep it clean and well maintained. In most cases, a nice kitchen will sell a house- but don't neglect necessary repairs just to have a nice kitchen.
Joe: In my opinion, one of the best decisions to make when selling a home is to meet as many expectations as possible. Either address any problems or uncertainties with the home via updates and repairs, or price and credit accordingly. Example: your home otherwise looks great, but you don’t have the funds or time to replace old upstairs carpet? Meet the problem head on with a flooring credit. Try to combat resistance before that resistance results in a buyer moving on to the next home.
I absolutely loved their advice. I particularly agree with Nathalie's assessment that a house will sell for the best price when it's updated according it its existing style. If you need help determining your home's style, what projects will yield the best return, of a little advice about how you can make big changes without a giant contractor bill, you can always email me at email@example.com or fill our this contact form and I'll set up a free one-hour consultation so we can figure out the best plan for your needs. You can also follow along with me on social media to catch daily advice and inspiration.
YOU’VE GOT QUESTIONS + I’VE GOT ANSWERS.
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