Evaluating Home Renovation
The single largest investment most of us make in a lifetime is our home. A home has many functions, providing shelter and security both from the elements and financially, but only if managed and maintained properly. In today’s challenging real estate market, many people are thinking hard about the value of renovating. This article discusses how to think about managing our largest investment, to ensure it is not only well maintained but also maximizes a property’s value in the future.
In the San Francisco Bay Area, owning and developing real estate has traditionally been a lucrative investment. But with the real estate market being less kind than typical, outlined are below some critical considerations and guidelines before embarking on costly renovation projects.
1. Know the current market value of your home
The key word here is current – not last year’s values, or what you might have projected your home to be worth now. Value is based on the actual selling price of similar homes in your area. Talk with realtors and view listings to see how your property stacks up against current sales prices (look at the sale prices – not the offer prices). This research helps guide you on the level of investment to make and avoid over or under renovating your property. In past years, however, real estate agents alone were a good source for assessing market value. In today’s market it’s the appraiser. If selling or looking to extract equity from your residential property, banks will look to their own appraisers to set the value of your home – not the real estate agent.
2. Consider Form and Functionality
Just like a car or TV, residential properties are the ultimate consumer product. Therefore know what features and functionality are most meaningful to you, as well as what future buyers would value too. Some considerations before you begin:
- How long do you plan to live in the house?
- If you plan to sell, how soon - number of years?
- Will you one day be renting?
- Will you be expanding your immediate family – children, parents?
- Do you like to cook and entertain or eat out most nights in the week?
- Do you need to consider accessibility, either to accommodate children, older residents or residents with limited mobility?
- Do you want access to outdoor space? A garden? A play area? A patio?
- Do you have pets in the house and if so – any special considerations?
3. Be True to the Architecture
Beware of fighting a home’s original design. While houses are living, breathing entities that evolve with changing lifestyles, a big consideration in the San Francisco area is working with historical homes. Not just beautiful Painted Lady Victorians but also early 20th century/post 1906 structures, Arts and Crafts designs, mid-century modern, etc. Think long and hard before converting your 1950s structure into the 1880s Victorian charmer you always wanted – you’ll be fighting the architecture every step of the way. Take time to understand your home and the design’s original intent.
4. Future-Proof Renovations
Major developments, such as kitchens and bathrooms, can deliver up to a 95% return on your investment if design choices offer longevity. Because the cost and disruption can be considerable, kitchens and bathrooms ought to remain “fashionable” for 10–15 years. Look for timeless designs with broad appeal if you plan to sell during its lifetime. Resist “this year’s” color trends for major features – tile, fixtures, flooring, countertops, etc.
5. Plans and Permits
While plans and permits can sometimes seem bureaucratic, time-consuming and costly, they’re there for a reason. Working with licensed professionals and your local Planning and Building Departments provide consumers with the best protection to ensure your development is receiving high quality workmanship and is in compliance with today’s building codes. Permits provide checks and balances during the development and offer prospective buyers a history on the development of the property. This is not an area to skip – it may result in sub-standard functionality that can come back to haunt you, or even worse cause real hazards such as poor electrical or structural problems. Beware of any contractor who wants to ignore them.
6. Infrastructure…What’s Under the Hood?
Before focusing on color schemes and finishes, review the infrastructure of your home. It’s usually not the most exciting part of renovations but what makes your home function, as it should. Is the electrical system sufficient to support your new upgrades? How effective is the HVAC, windows and doors? Is your home seismically upgraded? Getting these right before you focus on the finish prevents expensive undoes and redo down the line. Get the bones of the house right first.
7. The Budget
A general understanding of the market rate for materials and labor in your area helps set a realistic budget and expectations. Understanding your budget may mean remodeling your home in phases (see above re. Getting the Infrastructure Right First and Knowing the Market Value of your Home). Evaluate your remodel projects vis-à-vis the market value of your home. Beware of under or over investing – getting the balance right is key to ensuring the value of your home on par with its market value.
8. The Schedule
Licensed professionals will guide you through the complexity of the schedule – and will provide details on your role in ensuring the schedule stays on track (for example, if you are choosing and ordering appliances, tiles, countertops, etc.). The schedule will take into consideration material availability, weather delays, inspector schedules, crew availability, displacement of your family, etc. You, the homeowner, play a key role in keeping to the schedule – be prepared to allocate time to make decisions with your team leader.
9. Hiring the Right Team
Be sure they meet your needs, as you will be “living” with them for several months. Seek experienced and licensed professionals who can guide you through the process. You are part of the team, so understand your role and responsibilities vs. other decision makers in the household (there should always be one voice to the team leader).
Choosing licensed professionals who are in good standing with the State of California is an important first step – you can visit the California licensed contractor site for validation.
10. You Get What You Pay For, Sort of…
As the largest investment most of us make in our lifetime, taking care of our home ensures it also takes care of you. Careful and considered investments in your home development projects provide you will the shelter and security you desire.
Follow these common sense guidelines and you should enjoy a smooth and successful renovation.
Gina Centoni is a California State licensed contractor in San Francisco, specializing in restoration and development of residential properties.
