Renovations to Ditch to Protect Your Bottom Line
The primary objective of investing in Kailua Kona Hawaii real estate, and real estate in general, is to reap a return on your initial investment. In the world of Kailua Kona Hawaii real estate, there are several ways to do that. Those who fix and flip add value to a home through selective repairs to turn a profit. Those in buy and hold operations may do the same, but they also reap passive income through both rent and the standard appreciation of real estate values over time. The goal is always growth, in terms of both net worth and your portfolio.
Of course, not all methods of generating a return on your investment are created equal. Some low-cost repairs add tremendous value to a home. Others add so little that they are hardly worth the time and effort, and they may even result in financial loss. We’ve compiled a list of the renovations to avoid if you’re looking to maximize the return on your real estate investment.
Extra Bedrooms
If you’ve purchased Kailua Kona Hawaii real estate with one or two bedrooms, intending to either buy and hold or fix and flip, adding a room might not be a bad idea. But if your home already has three bedrooms, the cost of tearing down and building new walls, installing doors, and reformatting the infrastructure of your home simply isn’t worth it. Indeed, on average, adding a bedroom only increases the initial value of a home by approximately 4%.
Today’s homebuyers, who are typically Gen X’s or Millennials, have smaller families and smaller budgets. While a nice guest bedroom may have been a necessity for baby boomers, it’s a luxury in the eyes of most current homebuyers. You would be much better off adding an additional full bathroom, which can increase the price of a new home by almost a quarter of its initial value!
Swimming Pools
Swimming pools might be fun for kids, but they take time and money to install. The average swimming pool costs almost $50,000 to add! Despite the cost, swimming pools add little to no value to a home, making them completely pointless if you intend to reap a return on your investment. And while they may provide a draw for families with young children, they don’t add universal appeal.
If you’re looking for luxuries that will add value to your home, opt for a fireplace instead. Shockingly, installing a fireplace can add 12% to the initial value of your home! Of course, location matters. That figure may be higher in cold climates, but if you’re investing in Kailua Kona Hawaii real estate, opt for air conditioning instead.
Luxury Aesthetics
Again, consider the needs of today’s average buyer of Kailua Kona Hawaii real estate. Most are individuals, couples, or small families of low or middle income with busy schedules and multiple jobs. While renovating your home to produce a luxurious aesthetic may have added value when the market included baby boomers, it is largely a waste of money today. Stainless steel appliances, large bay windows, high-vaulted ceilings, granite countertops, chandeliers, and intricate interior design are not only expensive; they also require deliberation and, often, the insights of a professional interior designer.
Instead, consider functional add-ons. A garage increases the value of a home by an average of 13%; a basement, 9%; and a partial bathroom, a whopping 15%! Again, the appeal of such upgrades is contingent upon location. Basements are less valuable in flood zones, and garages are less valuable in high-walk areas. Ascertaining which specific upgrades will add the most value to your home requires gleaning the priorities of your prospective buyers or tenants. If you lived the way your prospective buyers do, what would you value? What would make your life easier, or harder, or is just irrelevant to everyday living? Always start with the buyers’ desires.
Inconvenient Luxury Aesthetics
Naming inconvenient luxury aesthetics for Kailua Kona Hawaii real estate might seem redundant, but the difference is worth delineating. To amp up the luxury aesthetic of your home, you have to make some costly changes that the average middle-income buyer probably will not value.
But certain aesthetic alterations are not only costly; they are, plainly put, annoying, and can even detract from the value of a home. The difference is that these types of repairs aren’t just unnecessary. They can be actively harmful. Skylights, for example, are great until they start to leak. Swimming pools are fun, but they require regular expenses and maintenance that your average buyer can’t provide for. A nice, finished basement that develops a mold problem can cost a lot of money to fix. Again, be mindful of your buyers. Are they upper class individuals with refined and particular tastes, or working individuals seeking simplicity and functionality? If your buyers are the latter, oftentimes, less is more.