Real estate agents will tell homeowners to look at the “foundation” of a house. Many properties can look very different with some simple renovations but what is the difference between a new house vs. home improvement? Simply answered, it’s the scope of the project.
There are many reasons for updating a house. a Real Estate Investor may wish to flip and wants to put in a minimal investment for a maximized profit. A homeowner may wish to increase the size of his home instead of moving. Another homeowner may wish to touch up the house before putting it on the market to increase the asking price.
Major Renovations – A major house renovation will involve professional contractors and often will take longer than a week. Additionally, the homeowner would need to work with their general contractor to obtain building permits from the city or town, and get the structural changes approved.
A common house renovation is adding in another room such as a half bathroom. Other major house renovations would be repairing or replacing the foundation, adding in a basement, and adding in a second story. These home renovations impact the structure and integrity of a house, and could require an architect to evaluate the effect on the house’s frame.
Sometimes the property owner will tear down everything except one wall and rebuild a new house that fits into the lot size and city’s zoning regulations. This has become common in urban areas where the original houses were built in the 1950-1970s and the owners want a larger house and less yard. The impact to the value of the property could be major especially if you’re increasing the livable square footage.
Minor Renovations – Often, a homeowner will want to upgrade a bathroom or kitchen to look more modern. This would also involve a contractor obtaining permits, but no major structural changes. That doesn’t mean there aren’t any minor changes. Moving a doorway and removing a wall would be minor house improvement, and would need a professional to evaluate the load bearing beams.
Often a kitchen renovation would include changing out sinks and cabinets. It could also involve converting electric stoves to gas. Another common house improvement would be to convert garage to an office or recreation room. Other common house renovations would be to re-pipe the incoming water with copper as well as replacing windows and doors.
The impact to the property value could be major or minor depending upon the update and the value of other properties in the neighborhood. A gourmet kitchen could improve the enjoyment of the house, but not increase the sale price if the other houses in the area have updated kitchens. Removing walls to reduce the number of actual rooms and converting bedrooms to offices could negatively affect the sale price.
Updates – The most common home improvement is a cosmetic update. It often involves repainting the inside or outside the house and no permits are needed. Another simple update is replacing flooring. Replace carpeting with tile or wood flooring would improve the perception of the house as being more modern and luxurious.
Some house renovations could be tax write-offs. Always verify with a tax professional before writing off the expense.
Finally talk with a local real estate professional about home improvements in the neighborhood. They have the research and knowledge for which improvements increase the sale price when the time comes to sell.