Home improvement: Small is beautiful

Posted by Woodrow Aames ~ January 28, 2011

In my last half dozen blogs I've been urging homeowners to be cautious about the dangerous potential of grandiosity in their plans for home improvement. Experts have been warning homeowners and DIYers for almost a year now to use the current housing stall to make modest improvements, rather than embark on huge undertakings that can be killers to returns on investments come valuation time.

As early as last May, M.P. McQueen wrote a piece for The Wall Street Journal entitled "The News Rules of Remodeling." At that time the writer gazed at the free-fall created by foreclosures and plummeting prices, telling readers to perform gradual improvements, say to the kitchen and bath.

Even homeowners in California's volatile Silicon Valley saw small gains by performing bite-sized upgrades in paint, under-cabinet kitchen lighting, opening up tight doorways and other cost-effective changes. Recently I wrote about inexpensive winter improvements and interior painting projects that make financial sense.

Revamping home improvement plans

McQueen suggested a year ago-and it still holds water-to supplant great upgrade schemes with economy scaled improvements. For example:

Swap out: Bathroom addition ($37,200) Replace with: Bath upgrade to low-flow toilets, new fixtures and new lighting ($16,000)

Swap out: Major home office remodeling ($27,000) Replace with: Converting small bedroom to home office with new wiring ($2,000)

Swap out: Family room addition ($79,000) Replace with: Screened-in porch from existing deck ($15,000-$20,000)

Swap out: Master suite addition ($99,000) Replace with: Attic bedroom conversion with small bath ($49,000)

Last week I wrote that attic conversions brought a nifty 81 percent return on investment. Hence, almost a year later, small scale remains beautiful. Readers of this blog wisely asked if an 81 percent ROI really constitutes a 19 percent loss. Yes, it does-from a half-empty glass perspective. Cutting losses in a distressed economy can often be the best you can hope for. But I'm optimistic that while home values may never return to the ballooned levels of the last few decades, they will get better.

When you compare the possibility of having to sell off your home today when buyers have the pick of the litter to losing 20 percent in an investment, it looks rosier to me. It's especially true that when you have a home with serious problems that may drive off potential buyers, you should put your available home improvement budget into right-sized upgrades. House hopping, once a national pastime, may finally become a thing of the past.

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