Money Pit Home Investments Money Pit Home Investments
When it comes to what to do to add value to your home, thoughts of state-of-the-art appliances, the best decor and a beautiful landscape probably all come to mind. There's nothing wrong with those things if you are doing it for yourself as a homeowner, but if your home is also an investment, you'll want to think twice before starting any work. Here's four key areas you'll want to stay away from so that your home won't become a money pit of bad home investments:
1: Landscaping: Curbing the Appeal
We've all heard how very important curb appeal is to a home, but this doesn't mean you need to invest a lot of money into your landscaping to accomplish that. Not only do you need very little money to make it look nice, but you also don't want to over invest because you don't know how long you'll have to pay for its upkeep while awaiting a buyer. Another reason it's not on the 'good' investments list is because like the interior, it's always best to leave a (nice looking) blank slate on the exterior to allow buyers to envision their dream and not yours.
2. Dream Kitchen or Kitchen Nightmare
High end stainless steel appliances, beautiful granite counters, and floor tiles from an artisan in Italy may be your dream kitchen, but will it be someone elses? Although you may think that kitchen would sell to anyone, and it probably could, by buying the higher end of everything you've spent way too much to ever consider it as an investment. This doesn't mean you shouldn't remodel your kitchen. In fact, remodeling a kitchen or a bathroom is actually one of the best investments a homeowner can make to their home. It's the overdoing it that will get you in trouble.
Extra kitchen tip: When remodeling a kitchen (or bathroom) you need to think more like an investor, and less like a homeowner.This means asking yourself: What can I do to make this kitchen both appealing to the eye and practical to use for under $15,000? That's the average cost of a kitchen remodel on a $250,000 home that you can still recoup at least 92% on, which makes it a good number to stay near if you can help it.
3. The Unseen and Everything Inbetween Scene
It may seem like common sense to put in a new water heater, plumbing system, or updated HVAC unit if you're going to sell your home anytime soon, but the golden rule for the unseen and everything inbetween is: if it's not broken, don't fix it. Although these things may be old and outdated, unless you're planning on benefitting from them yourself (for a long time), don't spend the money on upgrading or updating them. These things may seem like they add value to your home, but in all actuality the seller already expects these things to be in good working order, so they're not going to pay you extra just for putting in a better or more recently installed unit of anything.
4: Got Money to Burn? Get a Fireplace
Adding extras to a home such as a swimming pool, hot tub or fireplace may make your home more appealing, but if you don't already have them, don't add them. These three things are actually some of the largest money pit home investments you can make because along with throwing your money away when you add them to the home, you're also likely to end up losing money every year that you're stuck with them since they require constant upkeep and maintenance. Even worse is that when it comes time to sell, no one wants to have to pay extra to get the chimney up to code, have the pool relined or repair a broken water pump, but if you have any of these 'add-ons' it's a possible issue you'll end up having to foot the bill for in one way or another.
Final Tips to Removing the Pit and Keeping the Money
One way to think like an investor is to consider the value of the investment in ratio to your home's worth. For example, if your home is worth $200,000, you wouldn't add a $10,000 refrigerator to the kitchen (and yes, there is such a refrigerator). If you did a good job by not buying a home that's a money pit, make yourself proud and keep it that way by not adding to it things that can make it into one.