Home Remodeling Projects-the Pain, Cost and Value

Mike Flynn, Senior Vice President

In 2013 my mom passed away, leaving me as an only child to tend to the needs of my very with it and mobile 99 year old dad.  Along with dad also came their baby, the “forever home”, which they lovingly built themselves in 1974.  So, a 99 year old dad, a 40 year old house built in the Brady Bunch era and an invitation from my dad for my wife Melanie and I to sell our home in Versailles [which we also designed and built] and move in with him.  For both of us being from Lexington, it had always been our plan to relocate to Lexington from Versailles once the nest was empty, however, it was going to be on our terms, not these.  As John Lennon once said-“life is what happens to you while you’re busy making other plans”.  Truer words have never been spoken.   Not only do we get a house that needs a ton of work, we get a 99 year old roommate!   Life happened. 

I had been on my parents for many years to sell this house, and if not sell it, at least do some upgrades-as I saw where things were headed.  They would have none of either idea.  The last thing aging adults who are on a fixed income need is a split level house spanning close to 7,000 finished square feet having a significant amount of deferred maintenance, as absolutely no voluntary updating had been done in their 40+ years of ownership.  The painful part was watching the house deteriorate as they performed only the bare minimums to keep the house up.  The easiest decision is no decision.  Therefore, no updates were made, problems were only solved as they occurred, and nothing was prevented.  The house was basically vintage to 1974.

So here I am, a career banker, and my wife who is conveniently in kitchen and bath cabinet design and sales, taking off on a 7 year project of renovating and remodeling the entire house-inside and out.  It was done in phases, as due to the size of the home and the cost to do it right it would have been impossible to do the whole thing at once.   Complication #1, this home is located in an upscale development, so the quality of the improvements need to match the neighborhood of the home, which adds significant cost.  And complication #2, we had to do this while my dad was still very much alive-he lived another 4 years, and he thought we had lost our minds for replacing the “beautiful” textured ceilings, the orange and celery green shag carpets [some of which had holes in them], the various banana yellow and avocado green tiles in the bathrooms, and the smoky mirror tub surround.  After redoing this home, in addition to other real estate investments and projects we have done in the past few years, we now consider ourselves fairly knowledgeable on home remodeling and improvements.

So you are facing questions on home renovations and remodeling.  What to do and where does the money go first?  And why are you doing this-is it for basic maintenance and upkeep, resale, comfort, security, personal wants, or a combination of all of the above?  Based on first-hand knowledge as well as that of several remodeling experts-it is imperative to get basic home maintenance and upkeep items under control first.  A new kitchen is beautiful-but if your basement is leaking, smells like a swamp and has mold issues-guess what-you’re fixing the basement first.  Want a new bathroom?  Great-but the roof better not leak and I don’t want to see water stains on any ceiling.  A fancy theater room or speak easy?  Sorry-you are replace the rotting wood siding with new maintenance free vinyl or fiber cement boards.  Steam shower?  Nope-those 40 year old rotting wood doors and windows need to go and be replaced with new energy efficient maintenance free windows and doors.  We spent the first 2-3 years fixing what I call “terminal diseases”-the things that can kill a house-the rotten wood siding, deteriorated exterior doors, spalled concrete, roof leaks, see through garage doors, the list goes on.  It was hard for my wife to stomach these repairs and expenses as it was significant dollars from the budget gone and the kitchen and baths were still ugly.  Once we got all of the diseases cured, we were able to move on to the fun things-baths, flooring, paint, all the pretty things you see in pictures on Pinterest or Houzz.

So-if you are considering doing some remodeling you need to prioritize the repairs-those that are necessary first-then on to the good stuff. If your house is in good order, you can go straight to the fun things.   This is my preferred order to address:

  • basic maintenance, upkeep and security
  • home comfort and modernization
  • improvements you want which provide little to no additional value 

According to regional data on the website https://www.remodeling.hw.net which covers 4 states in the East-South- Central area of the United States [Kentucky, Tennessee, Mississippi and Alabama] the 2020 Cost versus Value report reinforces what I have learned over the past 6 years and also supports my bullet points above.  Fix what’s messed up first, do the pretty stuff last.  While cost data, project size, labor availability and many factors go into this report, these are their basic findings.  And this was in 2020, what we are seeing now in the industry and if you are paying attention to current events at all, COVID has created other matters which have a direct effect on home improvement projects.  People have spent so much time in their homes they are seeing all the things that are wrong.  Lumber is at an all-time high.  Supply chains are disrupted on just about everything-appliances, cabinetry, windows, etc.  Time to complete jobs is extended.  And labor?  Forget it.  Good contractors are so busy they cannot keep up, and the bad ones, well, you don’t want them in your house, as they are usually bad for more than one reason.  ALWAYS get references on contractors, and the best reference is first hand from someone you know who has had their referral work in THEIR house, not just someone they have heard does good things.   So-here are the results of the survey:

Another thing to remember-scale your project to the value of your home.  If your house is worth $200,000, you don’t need the highest end window and door package, and vice versa-if your home is upscale, don’t buy the cheap apartment grade replacement windows. 

And finally-there are lots of little things that you can “DIY”.  As a weekend warrior myself-I look forward to the legal pad list staring at me every Saturday morning.  Remember-Pinterest, Houzz, This Old House, and YouTube websites are your best friends.  If you dig hard enough, and this even pains me to bring this up, even Tik-Tok can help [but don’t get sidetracked and wind up in a black hole of time waste!]  I have learned many of my skills from doing hours of browsing these sites, gaining valuable knowledge and tips.  Also learning what products are available out there is paramount in your projects.  Things change rapidly and with advancements in different products and materials there are lots of cool things out there.  Here are some simple things you can do that don’t cost a lot of money, and even the least skilled homeowner can accomplish:

  • Increase your curb appeal.
    • Landscaping-visit your local garden center with a photo and a drawing of the area you want to freshen up.  Their design staff can help with layout, plant selection, and planting tips.  Trim the shrubs, put down some mulch, add some annuals and perennials with color.  Boom-a new look.  Anyone can learn how to work a shovel and a rake.     
    • Paint your shutters or front door with a fresh coat of the same color, or maybe even a new color. We just changed the front door color-to a pretty aqua from its prior orange- red hue of 40+ years, and wow-what a difference!
    • Install low voltage or even solar landscape lighting-a good and simple low cost low skill weekend project.   Lowe’s has very good house brand products that do not cost a fortune.    
  • Paint a room.  Head over to the nearest paint store and ask for trends on interior colors.  Take a few photos of your room and have the store staff help you select some modern colors.  Buy a few rollers and some painters tape [unless you can “cut” good] and you will have a new look after the weekend!  I tell my kids “buy the good brush” and take care of it and it will pay off in the quality of your painting projects. 
  • Update your exterior lighting.  Even if you have no electrical skills and have to hire an electrician, this is a low cost way to freshen up the exterior look of your house.   Basic wiring is pretty simple and there are plenty of instructional books at your hardware store or big box that can teach you this skills.  Just remember to turn off the breaker! 
  • Update your interior lighting.  There are tons of new LED products out there, which not only will freshen your interior up, but will save on your electric bill also.  Do some homework and understand the different color temperatures and what [not who] Kelvins are.  And again-don’t forget the breaker.     

And finally-how the heck do you pay for all of this?  Other than cash, you have several options, which any Bank of Lexington loan officer can navigate you through the process.   

  1. You can establish a revolving home equity line of credit-basically this is a line which you can access to fund major improvements on your house.  When you pay the funds back, the funds become available again to draw, this would be helpful in phased projects.   
  2. Establish a fixed rate fixed term second mortgage.  Basically you know the cost of the improvement[s], you borrow this amount, and pay it back over a fixed period of time.
  3. A popular option recently is a cash out refinance of your existing first mortgage.  Odds are that over time your house has appreciated in value and this coupled with amortization of your loan balance you have likely created significant equity in your home.  You can refinance and take cash out [basically walk away from the closing with cash in pocket to fund your improvements] possibly lower your rate and maybe even lower the payment on your loan.  A true win-win.  Mortgage rates are at historical lows right now.

So in conclusion-prioritize your projects and see a lender at Bank of Lexington to get your money lined up.  What the house needs comes first, the things you want that increases value comes second, then there’s the rest.    And finally-Have fun!