At a time when 81% of homeowners say they’re spending more time at home during the pandemic compared with last year, home renovations may be at top of mind.
But many improvement projects can be time-intensive, costly, and exhausting — especially if you do some or all of it yourself.
Cashay talked to several experts to break down what you should know before tackling home renovations, including costs, what to do know about DIY, and financing.
Know the cost and returns
If you’re considering a home renovation to pump up the resale value of your home, choose your project carefully. Not all will provide the highest return on your investment.
While popular to do, kitchen renovations “on any scale offer some of the worst returns on investment,” said Amanda Pendleton, Home Trends Expert at Zillow.com, a real estate listing website. You get about 50 cents on the dollar, she said.
“Your money is better spent on a mid-grade bathroom remodel, which can net about $1.71 in resale on every dollar you invest.” Pendleton said.
Going through with the kitchen remodel also will require a hefty upfront investment, which again you’re unlikely to get back. A 2020 study by Houzz, an interior design company, found median kitchen remodeling can amount to as much as $35,000 for the average family.
Watch out for cost creep, too. A specific area to tread cautiously is DIY installations of fire pits in your backyard. While Zillow reports that homes listing outdoor fireplaces can sell for 2.2% more than expected, you can easily go over budget, experts said.
“Zillow research finds adding a fire pit to your backyard could boost your sale price by 2.8% when mentioned in a listing description,” Pendleton said. “However, if you take it to the next level and add an outdoor fireplace, you’ll have a far larger and more costly project, and you won’t see the same payoff.”
When to hire a pro vs. DIY
“DIY projects can be cost-saving and rewarding,” Pendleton said, “but only if you take on projects that are within your skill set.”
A recent study by Zillow and Thumbtack found the most expensive projects are those that start as DIY, but are finished by a professional.
For more extensive remodeling efforts related to structure, plumbing or electrical work, you may want to hire a contractor. This is largely because renovations can also come with insurance implications.
“It is critical that a homeowner — prior to starting DIY renovations or repairs — contacts his or her insurance agent or carrier and ensures that such work will not result in a dropping of coverage or resultant claim exclusion,” said Stacey Giulianti, chief legal officer at Florida Peninsula Insurance Company.
On the other hand, if your kitchen or front door simply needs a painting touch up, you can do it on your own, experts said.
“The best DIY projects to tackle are the ones you can do well enough to have a quality finished product, which includes tasks like repainting,” said Andra DelMonico, interior design expert at Next Luxury, a lifestyle website. “You could give the interior walls a fresh coat of paint or paint your kitchen cabinets.
Painting your front door alone can also boost your home value. A study by Zillow found black front doors could increase your sales price by 2.9%.
“Adding new exterior paint to your home is a project that is great as a DIY. Sure, the process can be long and tedious, however, it is a large enough project that the savings can make it worth the extra time and work,” said James Watson, owner of Omaha Homes For Cash, a real estate investing firm. “The simplicity of the project makes it a great DIY for anyone looking to add value to their home without breaking the bank.
How to finance renovations
Last, if you do undergoing a renovation, either by yourself or with a contractor, make sure to budget correctly. It’s best to use money you’ve already saved up. But if you have to lean on borrowing, it’s better to tap your home equity than to rely on credit cards, which will eat into any returns.
“It is going to be hard to get a good return on your investment if you're funding everything via a credit card charging 15% interest,” said Derek Gabrielsen, CRPC®, senior wealth advisor at Strategic Wealth Partners. “Savings, or perhaps a home equity line of credit (HELOC), are a much better way to go. Once the funding is there, make your decisions with resale value in mind.”
Read more information and tips in our Mortgage section