Remodeling a home is a big project. All home renovations can be expensive, and if you don’t know what you are doing, you may find yourself in over your head rather quickly. With that in mind, this article will look at the 30% rule and how it might help you avoid getting in trouble.
A Simple Rule to Guide Renovation Choices
It’s hard to know how much you should be willing to spend on a renovation project for your home. You want to do it properly, but you also don’t want to waste money in the process. That’s where the 30% rule comes into play –
- The 30% rule states that a homeowner should not spend more than 30% of the home’s current value on renovations.
- This guideline helps prevent over-improving a property beyond what will be worthwhile on the market.
- Spending more than this percentage is unlikely to yield a positive return when the house is sold later on.
There is, of course, no hard and fast rule that limits your renovation spending at 30% of the home’s value. However, if you go beyond that threshold, you will probably experience diminishing returns and not get value for your money in the end.
How Do You Calculate the 30% Rule?
It’s relatively straightforward to calculate the dollar amount that is represented by the 30% rule. You can use any of a number of online tools to get a rough estimate of what your home is worth now, and you can multiply that number by .30 to determine a rough renovation budget.
Note that you are not calculating this number based on what you think the home will be worth after the renovation is finished. You should be using pre-renovation numbers to do this math. So, for example, a home that is valued at around $300,000 would have a renovation budget of about $90,000 at the top end.
What Types of Projects Fit Within This Rule?
You’ll find that there are plenty of different renovation projects that you can complete without violating this rule. Those include the following –
- Roof replacement will improve protection for the home and significantly upgrade resale appeal to future buyers.
- Vinyl Siding upgrades also help to protect the home and keep it dry inside, and offer a big boost to overall curb appeal.
- Gutter systems will manage water more effectively and make foundation problems less likely.
- Kitchen or bathroom remodeling are great ways to make your home more enjoyable to live in and more marketable to buyers when you decide to sell.
Generally speaking, you want to focus your renovation dollars on projects that are practical and functional, as those are what matter most on the open market.
Put an Expert on Your Side
If you are looking for a remodeling contractor, GSO Contracting would be the ideal choice for whatever project you have in mind. The GSO team is an experienced Greensboro builder specializing in roofing, siding, windows, and gutters. Reach out now to learn more about the services that are available.