What does home renovation and cake have in common?

By | October 8, 2016

(June 10, 2016, Austin, TX) – A good renovation lets you enjoy your home now and pay you back later.  It is like that cake you can have and eat it too!  This is the advice I gave to my girlfriend who has been stressing over whether she should sell her house, renovate or do nothing.  She looked at me and wondered if there can truly be a happy medium.

Meet my friend, Susie

Susie, my sweet friend, is a beautiful mother of three and a newly minted graduate with a nursing degree. She, her attorney husband and 3 kids live in a middle class neighborhood in North Austin. Like the rest of Austin, Susie’s neighborhood has gone through some nice appreciation.  Yet her neighborhood remains relatively affordable with median price at around $250K. Every time a new listing comes on market, it gets snatched up with multiple offers.

It is very tempting for Susie to sell her house now and make a profit. But it is equally expensive to buy into this market.  She needs a couple more years before she can afford her dream house.  This family of 5 has outgrown the 1400-sqft house she and her husband bought 10 years ago. Susie feels stuck, especially after a long day at work coming back to all the wear and tear the house has sustained from her 3 rumbustious kids.

Susie thought about renovating the house since she cannot sell it yet. She wanted to upgrade her old kitchen with granite countertop. She could not help but keep thinking about the beautiful hand scraped hardwood floor she saw at her friend’s house. She was inspired by the trendy mossy gray paint from the Home and Garden magazine. She was even ambitious enough to talk to a couple of contractors about extending the back of her house… Except all the master planning so far has just all been in her head.

Like many of us, Susie is overwhelmed by what it takes to renovate a home. If making that seemingly never ending to-do list is not daunting enough, all the dusts, noises and disruptions from remodeling can bring tension to even the most compatible couples. The money and time involved to hire contractors can stress out anybody. Life is complex as is.  The stains on the carpet, the blotches of marks on the walls and the dying grass in the yard can all wait… Susie figured.  And she did manage to put that renovation genie back in the bottle …. Until she met me.

It must be fate

I own a rental next door to Susie’s. My house has sustained some damages from tenant abuse. I decided to fix it up and find a good family to move in, for good. As soon as the tenants moved out, I brought in a crew and started the renovation.

One day when I was pulling the weeds in the front yard, Susie walked up to me and introduced herself. She asked me how the renovation was going. She said she had been inside my house because she knew the previous owner.  For the last 5 weeks, she has probably heard enough Tejano music coming from my house and seen all the pickups parked on my driveway. She must have had a lot of expectations built up by then. When I offered to give her a tour of the house, Susie looked at me and said “Really? You would let me see your house?!!!”

Susie was greeted with gleaming bamboo flooring and 13-ft long faux silk draperies in the formal living as she walked in the house. She shrieked with excitement when she saw the fresh trendy gray hues on the walls in the family room.  She admired the kitchen makeover and uttered “I have the same kitchen… same size and layout but they look so……different!” she concluded.  She complemented my work with genuine oohs and ahhs.

Susie was so excited that she went home and grabbed her husband to join the tour. She knew she had to convince her husband first. She needed to show him that renovations can be done and is happening right next door. If the neighbor can do it, so can she. Knowing what Susie was trying to do, right there and then, I connected with her. When she asked for my help later on, I said yes in a heartbeat.

I let Susie tell me what she wanted to do. I introduced my contractors to her and gave her a few more names. We tried to touch base from time to time and she would share with me her renovation ideas. Sometimes Susie was inspired and ready to go. Other times she was quiet and unsure of herself. Last I checked, she said she was undecided.



Same space before renovation



An Epiphany!

Susie is back to the loop many homeowners find themselves in – should I sell, renovate or do nothing? It is a tough choice and a very personal one. I know that because I was in the same boat. I had felt like such a transient for the 10 years staying at my starter house.  I was never crazy about the house and I had always wanted to move up. I did not want to spend much money renovating the house.  Then life got crazy with jobs and a newborn. 10 years had passed before we were finally able to find our dream home.

When we were ready to put our house on the market, my husband and I were embarrassed by how dated the house looked.  We decided to make it more presentable.  We had contractors strip out the old carpet, put in hardwood floor, take down the wall paper, replace the stovetop and give the whole house a fresh coat of paint. We did all renovation while still living in the house.  The house turned out to be beautiful and sold in 3 days.

When I was about to hand our keys to the next owners, I felt at a loss. I really did like my house…well, after the renovation.

I then had an epiphany!

Had we done this long time ago, I would have been able to enjoy my house more. We did all that hard work and handed the fruit of our sweat and blood right to the next owners.

I simply could not see my house for its potential.  Or I just plain had no imagination. I had to wait until it was right in front of my eyes to see what a makeover can do to a house.

Over the next few years, I became more experienced with real estate investment and renovations. I have learned what projects are good investments vs. owner’s pet-peeves. I also know the type of improvements that can sustain normal daily use and still look great when you are ready to sell. My dollars stretch further because now I know where to source best value contractors and materials.

I shared with Susie a few things about home renovations. And I want to share them with you too –

Nothing is wrong with doing nothing

This is especially true if the thought of spending a few grands on that kitchen remodeling project can stir up a fight with your spouse. Or you simply do not know what to do with home renovations. Hang tight but educate yourself as much as you can.

Go tour a builder’s model home. Builders have done extensive market research. They know what most of us like. Check out your neighbors’ house when you see a for sale sign on their front lawn. This gives you an idea about what your house can sell for.   When the timing is right, you can pull the trigger with confidence.

What is good is what works for you and your family

Susie admired my bamboo flooring and wanted to do the same for her house. But I advised against it.  Her family plans to stay there for a couple more years and bamboo is simply too delicate for any families with small kids or pets. The right type of flooring for Susie is those scratch resistant hardwood or even engineered wood. They would exude the warmth feel Susie likes and will still look good when she is ready to sell.

The scheduling of renovations also needs to work for your family.  Susie talked about sending kids away to granny’s this summer while she stays and tackles the renovation.  Not a bad idea!

Most of us probably do not have the luxury of mom’s help available.  Figure out what works for you then pick the types of projects that you can live with, literally.

Left brain talking now

Susie wanted to extend the back of her house so she can add 600 sqft of living space for her growing family.  This is a serious renovation that can easily cost $60-$90K.  I asked her how much she was willing to spend and if she was looking to get her money back. I walked her through a few things –

  • The average and median price points of her neighborhood
  • The macro housing trend when she sells her house in 2-3 years
  • Factors specific to her house that can impact her rate of return
  • The time and money involved with getting permits, demolish, etc.
  • What she could do with the money alternatively

I said to Susie that this is her decision and no one else’s but hers.  As a friend, I could only advise her strictly from a financial perspective.  I said to her this project is at best a breakeven.  I would rather that she saves the money toward down payment when she is ready to move up to her dream home.

I gave Susie an example of a bad renovation.  Another girlfriend of mine spent $35K and added an enclosed sunroom to her house.  Some smarty-pants contractor did it but never extended the HVAC to the room.  When my girlfriend sold her house, sadly she did not get her sunroom money back because the space simply did not count toward the sqft.

Not all add-on is bad. I bought a rental that has been extended in the back by the previous owner and it was a solid job.  I don’t know how much he paid for it.  But as a rule of thumb, this type of extension, when done right, should be worth 50-80% of the market value of original construction.

The bottom line is you’ve got to research what the market can bear and make investment accordingly.  What you like is not good enough in and of itself.  How much you have spent can also be irrelevant to buyers if you did not do it right.

Your home is your sanctuary

We can crunch numbers all we want but at the end of the day a house is more than an investment. A house is a home, your sanctuary. Make it yours and enjoy it.

What I do want to leave you with is that having a sanctuary and getting a good financial return on investment need not to be conflicting goals.  Focus on projects that can improve your quality of life while adding value to the house.

Sign up at http://www.bestvaluepros.com and access the contractors vetted by locals. Join me and hundreds of other like-minded people at Smarthomeowners on Facebook, Austin’s very own social network for
savvy homeowners, at https://www.facebook.com/groups/1126992120694220

I will continue to share with you the type of projects that have given me the satisfaction of having that cake and eating it too.



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