For most folks, their home is their biggest investment. But few people think of their home that way, which can be a costly mistake.
That is not to say that you should only look at your home as an investment. Your home is many things, including a sanctuary and an expression of who you are. We encourage you to keep those priorities front and center as they bring meaning and happiness to your life.
Luckily, these purposes are not mutually exclusive. You can have a home that is a safe and comfortable refuge, an expression of your unique identity, and a well-maintained investment.
Tending to the investment variable in this value equation involves some straightforward strategies. To do so, it is first helpful to separate the investment in your home into three broad categories.
First, your home is an asset that will be depreciated for taxes yet, in most cases, increase in value. For most Americans, their home is part of how they fund their later, non-income producing years and provide an inheritance to their heirs. Protecting and growing this asset requires maintenance and development through home remodeling.
The second investment category of home investment is the monthly costs paid to keep your home. This can be further divided into operational and maintenance costs.
A third and more complicated category that all homeowners would be wise to consider is lifecycle or how long you plan to stay in the home. This becomes especially important if we are thinking of aging in place.
Below are a few tips for how to make the most out of your home as an asset. Please also see (link to other blog, Investing in Your Home Part 2: Daily Savings and Aging in Place)
Fix It First: Protecting Your Home Asset
Your home is like your car and most other physical assets; the better you take care of it, the better it will take care of you. Taking good care of your home requires a plan, diligence, and—for most of us—outside help. Here are some suggestions for good home care:
- Regularly schedule mechanical maintenance: Having your air conditioning and heater serviced twice a year will reduce utility bills, increase the life of your equipment, and avoid the frustration unexpected failures. It is also important to change your filters.
- Fix things as soon as you notice they need to be fixed: Letting things go can lead to worse damage. Getting it taken care of will avoid added cost and give you peace of mind.
- Check the envelope of your house twice a year: The envelope of your house is the outside surfaces. This is where unattended repairs can lead to big costs. Don’t wait until you are getting water in your home to fix your roof. Don’t wait until rot has reached the frame of your house to have the wood replaced, and don’t wait until the paint has peeled to paint your home. Here is a home envelope inspection checklist
Make It Work: Home Remodeling
While it is true that home remodeling seldom returns 100% of the financial investment, it is nonetheless a primary way that families create their desired sanctuary and expression of themselves. Home remodeling returns an increasing value with age. Here is a good resource for the return on investment for home remodeling projects. Here are some guidelines to help get the most out of your remodeling investments:
- Pay attention to design: A poorly designed addition that looks like an add-on rather than an integrated part of the home could even devalue a home asset. Also, make sure that the new space is wisely configured to complement the existing floorplan, creating flow and continuity.
- Mind your budget: If your budget is too tight to get what you want, consider waiting until you can afford to do it right. Cutting corners to fit a budget is a good way to create long-lasting regrets. This does not mean that you need to get your every wish or that you should be overly extravagant, but make sure that you don’t have to make so many sacrifices along the way that you are unhappy with the outcome.
- Avoid trends: This is harder to do than it sounds. Home design tends to be very trendy. You can usually date a house by its finishes. Colors, countertops, and floor coverings are fashion elements that change with each season. Imagine walking into your remodeled home 10 years from now. Will it seem classic or dated? To keep your home classic, consider reflecting today’s trends in easily changed elements such as paint. Also, use natural materials whenever possible. Carpet fashion changes over time but hardwood stays stylish. It’s the same with countertops. Artificial countertop materials have come and gone but granite has remained a solid choice.
- Hire quality professionals: Quality remodeling professionals will be able to help you articulate and achieve your goals. While remodeling is expensive and you may be inclined to go with a less experienced company that offers a lower price, think twice. Most of the savings will come at the cost of quality and durability, both of which will diminish your home investment.
Biting the bullet to take preventative measures to protect your asset and to get a quality remodeling job done by professionals may feel hard at the time, but you will reap the benefits of your decisions for years to come.