4 Myths Of Upgrades: Common Home Additions That Add Little Or No Value To An Investment Property

Many new investors have ambitious dreams when it comes to improving a property’s value, but often the focus of what improvements will yield a return can be slightly off track. What an investor thinks will be the most lucrative upgrade may truly not be a way to improve a property’s value at all. An improvement can be a less favorable decision due to the high cost of the upgrade or simply because what an owner likes is often not what a buyer wants. Here are four of the most common additions that individuals make to a home that adds little or no value to an investment property.

4 Myths Of Upgrades: Common Home Additions That Add Little Or No Value To An Investment Property

Myth: All home upgrades will increase the overall value of the property.

Truth: Not all upgrades will be worth your time or the costs involved. Research carefully before throwing money into a project.

As a investor, you have the freedom to make any upgrade that you want to your property. This is one of the beautiful aspects of owning your home, but you must remember that not every addition will pay for itself or be beneficial in the long run.

Take into consideration styles and trends; costs and upkeep; objective and perspective. Some renovations will be valuable to you, but not to a potential buyer. If you hope to improve your house’s net-worth — beyond the cost of the initial renovation itself — you must keep in mind who your buyer could be someday. Often, upgrades can initially seem minuscule and inexpensive in the early stages of a project, but ultimately drain your bank account. Take all scenarios into consideration. Take your time to plan which upgrades you will make as an investor.

Myth: The addition of a pool to a property will increase its value.

Truth: Pools — although beautiful and attractive — are a costly renovation that will probably never pay for itself.

Pools are a toss-up when it comes to increasing the value of a house. There is a possibility that you could notice some return for this addition, but more likely, the return would not be enough to pay for the changes itself. In actuality, having a pool on-site could be a potential turnoff for some buyers.

Many homebuyers do not want the costs and time associated with maintaining a pool. Those on lean budgets would not be able to cope with the additional expenses that come with owning a pool. For those homebuyers who have young children, a pool can pose a safety hazard.

As an investor, if you do choose to add a pool to a property, be certain that it is a desirable home for buyers in the local market.

Myth: Highly customized designs will add a unique feature to a home, thereby increasing its value.

Truth: Unless you are Frank Gehry, it’s advised to keep unique designs to a minimum.

Frank Gehry — the famous architect known for his bold, postmodern style and unique fabrications — would have the luxury to upgrade a building in whatever way he wanted. That building not only would retain value, but also increase in worth, but the stark reality is that you are not a famous architect.

Stay FAR away from upgrades that result in a design that is too personalized. Your idea of a dream kitchen is probably not everyone’s vision for a “culinary castle.” So, unless you are planning on living in your home for many years to come, the recommendation remains to think long and hard about renovations that are ultra-customized.

Myth: Adding ‘over-the-top’ luxury — regardless of what the neighborhood homes look like — will automatically add to the home’s value.

Truth: Your home’s value is influenced by its place. Being the fanciest home on the block is a detriment and not a benefit to the property value.

It’s important as an investor to take into account the personality of the neighborhood when determining what renovations to make on a home. If the upgrades made to a home are too ‘over-the-top’ for your the area, it will cause the alienation of buyers on two fronts. First, potential homebuyers that can afford your house would prefer to live in a more luxurious area, and second, potential homebuyers that like your neighborhood won’t be able to afford your house. Being a beautiful house on the block will work in your favor, but being the most lavish of mansions will not.

If there is even the smallest chance of selling your home in the future, think before making costly upgrades. The worst thing that you can do is waste your hard earned money on adaptations that don’t benefit your home’s value if you do choose to sell someday.