Conventional wisdom, as it relates to houses, is often too much convention and not enough wisdom.

Every year, somebody publishes a list of which conventional home improvements will give you the best (or the worst) return on your remodeling investment.

Remodel a bathroom. Replace your siding. Don’t build a swimming pool. Paint everything neutral colors.

Sit up straight. Get a haircut. Call your mother.

If “return on investment” (ROI) is why you bought a home, or why you’re remodeling one, you can stop reading now. Because the rest of this article isn’t for you.

Three, two, one…still here?

You invest in your home to improve livability first, not value. If you get more value in the process, consider it a bonus, but don’t make ROI your prime directive.

Otherwise you’ll end up like the potential client that came into my office a few years ago with a three-page single-spaced typewritten (as in made with a “typewriter”) list of things he wanted in his house.

His list included this line: “A large dining room, near the kitchen. Although we don’t need or want a dining room.” Why would he want to build a room he didn’t need?

Because he’s thinking of things to make the house valuable, instead of things to make it livable.

So let me rephrase the remodeling-ROI question this way: what are some cost-effective ways to improve the livability of your house?

Here’s my short list:

1. Walk-in pantry instead of kitchen cabinets

Kitchen cabinets are expensive. Half of them are up high on the wall where they’re hard to reach, and the wall space they take up could be better used for windows. A pantry takes up less space, stores a lot more, is much easier to use, and costs less to build.

2. Comfortable shower instead of big bathtub

My firm does a lot of work in late-70s/early-80s neighborhoods that are loaded with huge tubs. We’re taking them all out, one at a time, and replacing them with comfortably-sized showers (not the racquetball-court sized ones you see in home shows) that people actually use every day.

A shower takes up less space, uses less hot water, and is far more sanitary than a big tub.

3. Group windows together facing best views instead of scattering them around the house

Got a great view somewhere? Bring it into the house with lots of glass. Take excess windows from bedrooms and baths and use them to connect the inside of the house with the outside.

We once remodeled a house on the coast of Lake Erie that had one window – one – facing the lake. Hey pal, did ya notice the Great Lake in your back yard?

4. Keep ceiling heights reasonable for the room size

“Volume” ceilings do not automatically make better rooms. They just make taller rooms. Rooms that are harder to decorate and more expensive to heat and cool. Instead, focus attention on a view, a large fireplace, or other element and away from the ceiling height. Use wall trim and multiple paint colors to break up the volume of the room and create the illusion of height.

5. Spend more time planning, and less money building

I toured a client’s existing home before we began designing the new one. “Of course,” she said as we peeked in on the kids’ rooms, “these bedrooms are way too small.” Really? I thought. The smallest was probably 14’ x 15’. But each bedroom had at least one door or one window on each wall.

Pretty, but the design left little room for furniture.

I suggested we more carefully design the new bedrooms – keeping the furniture placement in mind. In the end, we were able to easily accommodate each child’s bedroom furniture comfortably in smaller bedrooms than what they’d had before.

6. Consider the simple elegance of the box form house

Subtlety and restraint used to be virtues in home design. These days, far too often, inexperienced designers attempt to attract attention to their homes by adding more stuff… more gables, more materials, more bays, etc. Others know that proper proportion, scale, and details are what turn heads.

The simple box house is a classic American form that’s survived 150 years of stylistic changes. Greek Revival, American Four-Square, Tidewater Georgian…all simple boxes. Great proportions, great details…done.

And here’s a bonus – the box form is easier and cheaper to build, and because it encloses a larger volume in less perimeter, it’s less expensive to heat, cool, and maintain.

7. Share part of the master bath

This isn’t for everyone, but it really tightens up the budget and the floor plan. Make the toilet and a sink in the master bath accessible to the rest of the house, instead of building a separate half bath – it won’t be used much by you during the day, and rarely by guests at night.

Why have two baths when one will do?

8. Spend it when you have it, not before

Sure, it’d be great to have those granite countertops now, but your budget’s tight and granite is ten times the cost of laminate tops. So how about putting in nice laminate tops now, and replacing them with granite in five years when you have the cash? You can easily do the same with light fixtures, flooring, window treatments…

9. Compartmentalized bath – two baths in the space of one and a half

Each kid doesn’t need his/her own bath, but they do need privacy and room to share. A compartmentalized bath puts two sinks in one room and the toilet and tub/shower in another – so three kids can use the bath at once and keep a little more harmony in the family home.

I doubt any of these ideas will ever make a magazine’s list of “Best Remodeling ROI” projects. But every one saves you money over a more “conventional” design strategy, and every one increases the livability of your home.

Blog Provided by Zillow.com

Model homes make us dream about living there, but living in your own home while it is being staged is tougher than it looks. The key is to easily contain and hide your personal items – not just to showcase your home better, but also to keep your personal life, well… personal!  Below are a few tips for homeowners who are living in their staged home while it is on the market.

Kitchen

In the kitchen, keep the countertops and sink clean. It is fine to have 1-2 appliances that remain on the countertop, assuming there is ample space and they are in good condition. Try to get in the habit of keeping dirty dishes out of the sink by either washing the dishes or placing them in the dishwasher immediately after use. Ideally, the counter dish drain should be hidden from view, but as long as it is neat and not bulging with dishes, it can remain on the counter during showings.  Keep that pantry clean and neat as well. And, yes, expect that buyers will open doors to kitchen pantries, so prepare accordingly.

On the kitchen floor, reduce the number of scatter rugs to ONE in front of the sink, preferably in a solid color, and toss all of the others.  Too many rugs in all types of patterns can make the floor look like it needs work, even when it doesn’t!

One more thing about kitchens – cooking! If you tend to cook with lots of spices, fry often or prepare foods with heavy scents, have a plan to neutralize the scents immediately afterwards. There are easy ways to do this like boiling a few sliced lemons on the stove or leaving out cups of white vinegar to absorb the scents and odors overnight.  It is important that your home smells fresh for prospective buyers and not like last night’s meal.

Bathrooms

Remember living in college dorms and sharing bathrooms, which meant having to tote bathroom items to use in the dorm bathroom?  Yep, it’s time for the bathroom tote to make its return to keep the bathrooms neat.  Give each family member a tote to store their toothbrush, toothpaste, wash cloth/hand towel and all creams, gels, sprays and makeup that normally lives on the counter around the sink, tub and/or shower.  Use the tote to store items under the bathroom sink, in closed door bathroom cabinet or linen closet, thereby keeping the bathroom countertops free from personal items.  Start using the totes daily – it will save you lots of time and worry.

Bedrooms

Most of the clutter in the bedroom is found near nightstands and closets. To help remedy the clutter, hide items in a closed cabinet or nightstand. Or, purchase a basket with a lid that will slide easily under the bed. Place all of your bedroom clutter in the basket  – tissues, reading glasses, pens, journals, gels, creams, etc. You can leave 1-2 books on the nightstand with your lamp and alarm clock but anything personal should be hidden from view. It also goes without saying that you should make your bed EVERY DAY once you rise to keep your bedroom looking its best.

Family room

Closed storage can be your best friend in keeping your family room neat.  Keep children’s toys and play items in a cabinet, basket or storage ottoman, for easy containment during a quick showing. Reduce the stack of magazines on the coffee table to 1 -2 latest issues, along with your remote.  Routinely sort the mail as it comes in. Mail that needs a response is immediately stored in a drawer or basket; junk mail is immediately tossed. It will help you keep your family room, kitchen or office area neater and keep wandering eyes from your personal items, too. If you are still receiving the daily newspaper, don’t keep yesterday’s issue on the coffee table, move it to recycling area in your home on a daily basis.

As you will quickly learn, living in a staged home is not easy, but it is manageable.  The key is to change you and your family’s behavior daily, rather than trying to “clean” when you get the call that a showing is happening in 15 minutes.  It will make those showings feel less intrusive and the perfect buyer will walk right in and fall in love with your well-kept home!

Blog provided by Zillow.com

Most people buy real estate hoping that homeownership will turn out to be a good investment. But increasing wealth doesn’t always come with buying. The same is also true for rent-to-own scenarios, where caution is also highly recommended.

The main issue with this form of home buying is that in most metropolitan areas, only about 1-to-3 percent of available housing is a rent-to-own (R2O) offering.

Here’s the reason that’s a problem: The vast majority of wealth earned in real estate comes from long-term ownership. If in that small pool of R2O offerings you don’t find a property you really feel good about, yet you still enter into that deal, this is more likely to result in you not owning it long term, because that home was not what you really wanted in the first place.

Bottom line: You probably won’t increase your net wealth as a function of buying that property.

In addition, most people trying to do a R2O deal are trying this strategy because they’re not creditworthy enough to qualify for mortgage financing. If you can’t qualify, the bank is telling you that they have concerns that your financial picture may lead you to default on a mortgage loan.

My advice? Please, take their advice! Work on your creditworthiness. Get some credit counseling from a reputable non-profit credit counseling organization. Get your financial house in order. You are most likely better off saving your pennies and working on your creditworthiness so you can buy that perfect home with low interest rate, fixed long-term financing a few years down the road.

Also, many R2O deals are offered by investors who bought the property and are selling it to you so they can make money! Many of these investors ask above-market prices for the properties because they assume you have no other option.

Additionally, many times the “rent” is above the comparable market rent. So market rent might be $1,500 but you are paying $1,800 with that additional rent to be credited (termed “rent credit”) for your downpayment. But if you aren’t able to purchase for any reason, including the chance you can’t secure bank financing, you don’t get that extra rent credit money back. So the seller keeps it. You lose.

Of course, all terms are 100 percent negotiable, so if you try one of these R2O deals, feel free to negotiate all terms to your advantage, and good luck.

I know people want to own real estate to earn wealth, and I’m the biggest proponent ever, since this can be a great way to earn long-term wealth. But doing a rent-to-own deal is unlikely to increase your wealth and more likely to end up costing you money via forfeits of those additional rent downpayment when you move out.

Oh, did I forget? It’s estimated that only about 10 percent or less of renters in R2O deals actually are able to close the purchase. So at the end of the day, you’ve paid above market rent to someone else. I’m sure they appreciated your increasing their net wealth? But for you, the better route would have been leasing a normal rental and saving money. That’s a more solid strategy for building wealth.

If you want to earn wealth on real estate, you need to buy that near-perfect property for all the right reasons — which is because you want to own real estate for a long time. That’s my philosophy, and it should be yours, too!

Article Provided by Zillow.com

Warren Buffett is bullish on U.S. housing, but only because he’s bearish on the willingness of young Americans to live in their parents’ basements.

Hormones — other people’s hormones — are prompting the Oracle of Omaha to revise his predictions about the future of U.S. housing, since it’s his contention that the creation of new households will spur demand for new housing units.

“People may postpone hitching up during uncertain times, but eventually hormones take over. And while ‘doubling-up’ may be the initial reaction of some during a recession, living with in-laws can quickly lose its allure,” Buffett wrote last week in his annual letter to Berkshire Hathaway shareholders.

Over time, the number of housing units necessarily matches the number of households (after allowing for a normal level of vacancies). For a period of years prior to 2008, however, America added more housing units than households. Inevitably, we ended up with far too many units and the bubble popped with a violence that shook the entire economy.

That created still another problem for housing: Early in a recession, household formations slow, and in 2009 the decrease was dramatic.

At our current annual pace of 600,000 housing starts – considerably less than the number of new households being formed – buyers and renters are sopping up what’s left of the old oversupply …

While this healing takes place, however, … housing-related companies sputter … This hugely important sector of the economy, which includes not only construction but everything that feeds off of it, remains in a depression of its own. I believe this is the major reason a recovery in employment has so severely lagged the steady and substantial comeback we have seen in almost all other sectors of our economy …

Fortunately, demographics and our market system will restore the needed balance – probably before long. When that day comes, we will again build one million or more residential units annually.

I believe pundits will be surprised at how far unemployment drops once that happens. They will then reawake to what has been true since 1776: America’s best days lie ahead.

The beauty of Buffett is that, in addition to amassing an astounding collection of stakes in a wide-ranging array of companies, he speaks plain English in a world gone mad with money confusion. He’s not always right: Buffett blamed himself for a potential $2B loss in a natural gas play he made.

However, when it comes to analysis about broad trends in the U.S. economy, Buffett tends to make serious sense — with a little lighthearted advice thrown in. That was true when Buffett amplified his sense that single-family homes are a solid investment.

On CNBC this week, Buffett said:

..if I had a way of buying a couple hundred thousand single-family homes and had a way of managing — the management is enormous — is really the problem because they’re one by one. They’re not like apartment houses. But I would load up on them and I would take mortgages out at very, very low rates.

But if anybody is thinking about buying a home — five years ago they couldn’t buy them fast enough because they thought they were going to go up, and now they don’t buy them because they think they’re going to go down. And interest are far lower. It’s a way, in effect, to short the dollar because you can take a 30-year mortgage and if it turns out your interest rate’s too high, next week you refinance lower. And if it turns out it’s too low, the other guy’s stuck with it for 30 years. So it’s a very attractive asset class now.

SOURCE: Motley Fool