I’m writing to first time homeowners here, those of you who have been paying off your mortgage for just a few years or months. You’ve been performing household repairs for the first time, dealing with homeowners associations, and enjoying the knowledge that you are keeping your monthly payments in the form of equity. This is the big payoff for homeowners. Equity equals wealth, and there are a lot of ways to build it. Homes tend to increase in value on their own, usually about 4 or 5% a year. But homes also increase in value according to the worth of improvements that are made to the structure and utilities of the building. If you are able to add another bedroom or an extension to your house there will be proportional increase in the equity of your home.
Nowhere is this more true than in bathroom improvements. If you are a prospective buyer walking through a house you’re thinking about buying, areas like the kitchen and the bathroom are going to be very important considerations for you. From the perspective of a buyer, an ugly countertop or a bath vanity from the 80’s may be a dealbreaker. They may not even realize that it’s the bath vanity that did it. It merely cements an impression in their mind: “This house is old and ugly. I don’t want it.” By making improvements to the kitchen and bathroom – important spaces where families and friends spend a lot of time – you’ll cement the opposite impression in the mind of a prospective buyer: “These people have invested a lot of work and money in this house. It’s looks great, and that’s money I won’t have to invest myself. I want to buy it.”
Even if you aren’t ready to sell, home equity is a great investment. In a way, spending for equity is like not spending at all. Investors often repeat some version of the maxim “You get a 100% return on any money you don’t spend.” By buying that new bath vanity, you’re securing that investment into the larger equity of your home. A total bathroom overhaul could increase the value of your home by $20,000 easily. It’s hard to get a 100% return on equity investments, but bathrooms are the closest. Homeowners often see 90% or more of the money they spend revamping an old bathroom come back to them when they finally sell. In some situations they get back a lot more.
But not everybody can afford a total bathroom renovation, and others can’t secure a loan for this amount. For these people, it makes a lot of sense to take your time and only spend what you can afford. I like not going into debt. On my first house, we picked a fixture at a time and looked around for a deal before we made the change. We became familiar with a lot of reclamation stores as well as great bathroom retailers like Modern Bathroom. By looking at our bathroom implements one at a time, we saved a lot of money. Here’s what we bought, in order.
- Bath Vanity – a well chosen bath vanity defines your bathroom. Big or small, storage or none, color, size, style, it’s all there in your bath vanity.
- Tub – We removed our old broken down tub and added a real, classic clawfoot we got for free when someone was throwing it out of their old home.
- Shower – It is really important to modernize the shower, as this is easily the most important piece in the average bathroom.
- Tiling and Flooring – Make sure that the flooring isn’t water stained, rotted, or simply unattractive.
- Walls and Ceiling – It’s easy for mold and wear to develop where there is lots of steam. Your buyer will definitely notice this.