subject: Is Remodeling Your Home a Good Investment in a Bad Economy? [print this page] Is Remodeling Your Home a Good Investment in a Bad Economy?
Due to the ever drooping economic picture, foreclosures and short sales the value of your house has most likely diminished pretty substantially over the past year or two. If you had a ton of cash the current "buyer's market" would be a long term investment gold mine assuming that the economy does turn around at some point in the foreseeable future. Most of us don't have that kind of liquidity so what long term real estate investments can we consider?
One thought at the moment is upgrading or remodeling your current home. There are at least three advantages to this idea: One, the remodeling or upgrade will have a positive net effect on you and your family from a psychological (feel good') standpoint, Two, it will increase your home's value once the economy turns around, the backlog of foreclosure properties are consumed and a seller's market returns, and Three, you can take advantage of the fact that construction industry has been hammered as hard as everything else and there are a lot of qualified construction people "out there" looking for something to do. The latter seems to indicate that you should get a much better price for your remodel job now than at any time in recent history prior to the current economic downturn.
Mortgage lenders are hurting like everyone else since home sales are at historic lows. Most these days will welcome a qualified homeowner who wants to borrow money for a home renovation, especially if the homeowner has a good track record and some degree of equity in the property.
It is important that you also be aware that due to the lack of employment in general and in construction in particular there will be a great number of not so qualified or totally unqualified people posing as construction experts who will want to handle your project.
So how do you sort through the potential onslaught of interested parties calling themselves "remodeling contractors" or "renovation specialists"? Actually the process is relatively easy but it does require a bit of patience, time and objectivity. In this market there are a great number of people who "talk a good game" but who no real expertise. Don't allow yourself to get drawn in to a great sounding sales pitch without checking things out thoroughly first. For starters, consider the following guidelines:
The day of the "handshake and a smile" agreement between two parties and everything works out just fine is long, long gone.
In the same context if a contractor or subcontractor smiles and says (sometimes repeatedly) "My word is my bond", run like your hair is on fire. Unfortunately that concept also went out a good while before the horse and buggy was replaced by the motor car.
Insisting on getting references from previous clients and then personally checking them out by, talking to the people for whom a contractor has done a similar size and type project can be a big help. Keep in mind, however, that nobody will give you the name of a previous client if they think it will result in a negative referral. You can learn much from people who have had projects handled by a contractor if you handle it as someone who is sincerely interested in what was done, how the job went, how budgets and changes were handled, etc. but without seeming to pry. People who are happy with the result of their project are usually delighted to talk about the experience. Anddon't limit your investigation to one positive interview. Check out two or three to see if the responses are consistent.
