Ah, the starter home. Every homeowner has one. They’re a great way to get used to all the trials and tribulations that await homeownership. Not only that, but they’re an excellent teacher for where and how to invest your money in your home. Obviously, you won’t want to spend all your savings or take out a loan or line of credit for improvements on your starter home; you’re not going to be there forever (hence the title starter home). That being said, it’s still worth investing in your starter home, especially as you start to plan your move into a more permanent house. Consider these finer points to decide what will make the best investment for you and your starter home.
Renovations and Necessities
It’s very unlikely that you’ll be renovating any part of your starter home. If anything, you could end up having to spend about the amount you would on a renovation upgrading more necessary things like replacing the roof or updating the HVAC, plumbing, etc.
Starter homes are often older houses built as long ago as the 50s and 60s. Aside from climate change and green energy initiatives not even being a blip on the Human Race Radar at the time they were built, certain things like the roof and utilities will have just plain worn out. But the structures are still sound. Brick houses are solid. So if the layout of the kitchen is particularly funky, or the roof is starting to go (to a point where patch jobs just won’t cut it) then taking care of major – necessary – projects as soon as possible (so you can enjoy the upgrade while you’re still there) is a sound investment.
Kitchen renovations cost between $10,000 and $15,000. You’re likely to get an 85 – 88% return on the investment at resale. But that price tag includes basically new everything, including a new layout. In order for this type of project to be worth it in a starter home, you’ll have to increase the flow, efficiency, and storage. You also must maintain and take great care with the new improvements while you live in the house. But if it’s difficult to work in the kitchen for whatever reason it’s a worthy investment.
Replacing the roof or green energy upgrades will cost about as much as a renovation. When it comes to systems in the house like heating and air, the roof, insulation, plumbing, and electrics… it’s never any fun to have to put your money into a starter for any of these reasons. You’re moving on at some point. But when it’s time to replace them, it’s time to replace them.
If you’re in this predicament, it’s prudent to consider green upgrades to the house like geothermal HVAC. It’s a pricey, extensive system. But the recovery rate in the reduction of your bills will have it paid off in as little as 6 years, and up to 10. Most people move every 6 years, so it’s a large investment to make in a starter home. But the energy improvements will be of higher value at resale.
In the end, you want to weigh the cost against the return against the time you’re spending in this house against the urgency of the repair/renovation. You can even consult the realtor who helped you get the house, as well. They know the area and its market. They can give you a broad idea of what you’ll likely be able to ask for and receive when the time does come to put it on the market.
Okay…. So What Do I Actually Do?
Excellent question. You’re paying attention! Minor remodels to the kitchen and bathrooms are the top two interior investments to make for a starter home. They yield back what they sow almost – if not completely – in full. This type of project includes painting and backsplash, new fixtures, one new major upgrade like floors, counters/sink, appliances, or cabinet refacing. The type of materials (how high or low you go on quality and durability) and labor (some things can be done DIY, others are better off in skilled hands) affect the overall cost. But you could easily spend well under $10,000 and have a practically new bathroom or kitchen.
Cosmetic upgrades, in general, are easy ways to up the value of your home. You could replace all the flooring of the house to a sustainable bamboo floor, build in some extra storage (try recessed knee-drawers in any room to add storage without adding or taking away any space), or update all the lighting and plumbing fixtures; smaller fixes that can be done a little bit at a time.
Outside, you can invest in landscaping (another full return on the investment) for a wise spend that is welcoming to you when you come home, and also better at catching the eyes of potential buyers. You can also replace your front and garage doors for a new look, and invest in green models that help control the transfer of heat and air in and out of the house – which helps save you money.
If you are going to make any changes, just make sure that you don’t completely divest from the original style of the house or out-market yourself. If the upgrades put your home too far out of the surrounding market it could be on the market a while, and that costs you money. As far as style, the overall aesthetic should be cohesive. Obviously, the newer parts are going to look and feel like new, but it shouldn’t feel like stepping into an entirely different house.
Investing in your starter home is a wise choice if made wisely. Take these tips and flip your starter for a successful return.