Remodeled Kitchen with wood cabinetsReal estate remodel projects typically fall in one of two categories. Renovations are usually made with the intention of increasing personal comfort or with the intention of maximizing sale potential. It’s crucial for people to understand the difference between the two, because a mistimed or miscalculated renovation can be detrimental to a bank account.

In this article I explain these two main reasons that people choose to remodel, and a couple specific examples of each one. The point is to educate you if you’re considering an upgrade to your property. Whether or not you plan on inhabiting the residence for a long period of time plays a big role in how financially viable the project will be.

Those made to maximize sale value

Many people update their house with the specific goal of making their property stand out in the housing market. This is a widespread practice that varies in specific technique. These remodels are usually tailored to what the housing market thrives on.

1. Increasing number of zoned bedrooms

When on the market, houses are usually broadly defined by the number of bedrooms and the total square footage. A ballpark price can usually be determined when the square footage, location and number of rooms are known. A house with more rooms will be worth more than one with fewer rooms in the same area, generally speaking.

Many people have a ‘study’ or a spare room and a common upgrade made specifically to increase listing price is the project of making one of these areas a properly zoned bedroom. Although the price increase is relative to the location, an extra zoned bedroom can easily fetch an extra $50,000 on closing date. Bedrooms are huge when real estate is concerned.

Important: If you want to increase sale value, find a space in your house that could potentially form a legal bedroom. You will be rewarded later on if it can work.

2. Updating the Kitchen

Regardless if people admit it, the kitchen is a focal point of any housing search. It’s hard to justify spending money on the order of $100,000 when the kitchen doesn’t satisfy. Homeowners understand this market trend, and often upgrade their kitchen specifically to entice buyers. Whether it’s redoing the cabinetry or installing new major appliances, people use kitchen remodels to help them on closing day.

Important: If you want to increase the appeal of your house as a complete listing, consider upgrading your kitchen. Even doing so aesthetically with a new paint job or new cabinets can make or break a prospective homeowner’s decision.

Those made to increase personal comfort

People all over the country carry out remodel projects to increase the space they live in for their own comfort. These types of renovations also tend to be upgrades that don’t pay themselves off on sale date. With more personal touch and with them having little influence on a potential sale, people perform these remodels when they are not expecting to move.

1. Adding a hot tub

This is a classic remodel that someone would make if they weren’t looking to move, and is surely not a practice to inflate sale price. This is a personal renovation that is too difficult to physically transport in any imminent move and not something to just do for the sake of doing. Additionally, hot tubs often require a foundation to be laid below them and a lot of extensive piping. There are too many unique components with this project for it to be simply a money maker.

Important: If you want to add a hot tub, awesome! Just don’t plan on it increasing the sale value of your property. This is a classic example of this type of renovation. A Jacuzzi is more ideal to just sit back and enjoy for the years to come.

2. Landscape renovation

Another traditional remodel, this type of project clearly falls in the category of renovations done for the sake of personal appeal. Landscaping is much too time consuming and costly to do specifically to make money on a sale. A couple extra trees will give a family the shade they desire and make them happy, but they surely won’t add another $30,000 to the listing price.

Important: If you plan to update the landscape of your house, make sure you plan on being there for an extended period of time. All of that time and money will be rendered useless because you will have a difficult time recovering that in a sale.

Renovating a house is a staple of home-ownership  However, a miscalculated upgrade can cost you thousands and thousands of dollars. If you are planning to sell your property, be sure to avoid certain projects. These are a couple of examples that you can apply to your situation with the goal of helping you spend money wisely when it comes to home improvement.

Tim Richmond writes about the mortgage industry, real estate, green building, personal finance and home ownership. He currently writes for the Native American mortgage specialists 1st Tribal Lending.