Renovations increase the value of your home. Whether you sell your home or pass your home on to your children, the increased value of your home can become a valuable asset in itself. Again, banks will loan against the value of the home, particularly after it has been paid off. And if you sell the home at its increased value, your profits are not taxed as long as you use them to buy a new home.

As a result, investing in your home is almost always a good idea. In fact, buying a fixer-upper and renovating it can be a business in itself. You can get a home mortgage if it is owner-occupied, which allows you to buy with only a small percentage down payment, renovate it, and flip it at a profit. You can then get a new home loan and start the whole process again.

Here are some ideas about how to decide what to renovate in your new home.

Set a Budget

Whether you are renovating a home as your residence or to flip it, you need to know how much you have to spend and how to make the most of your money. For this, you should set a budget.

Budgeting for a renovation can be difficult. Building costs vary a lot based on the materials and labor. You should consider getting multiple bids from different contractors. Once you find a contractor you like, you can adjust the materials and see the effects on the bid.

You should discuss how to decide what to renovate with your contractor. The contractor might have some insight into what fixes are most urgent in your home. For example, if the home has obvious water damage, water damage restoration and plumbing or leak repair might prevent the home from deteriorating further. It would not make much sense to spend money on a game room or fireplace if the roof leaks.

This allows you to use your budget effectively. By first focusing on where your money will do the most good, you essentially buy more time for further renovations.

Understand the Essentials for a Home

When you are figuring out how to decide what to renovate in your home, make sure you understand what is essential for a sound and sellable home. The most essential elements of a home include:

• Structure: Sound walls and roofing are essential. Remember that a home provides shelter and a home with damaged walls or a damaged roof does not provide shelter. Doors and windows are also important structurally, but less important than walls and a roof.
• Plumbing: Your home’s water supply must be safe and reliable. Keep in mind that plumbing includes both your water supply and your sewer or septic line. If either is compromised, it might move to the top of your list.
• Electrical: Your home’s electrical system can create a safety threat to your new home. Bad wiring or a defective circuit breaker box can result in an electrical fire. Poorly installed or maintained outlets and light sockets can electrocute you or your family members. Just as a matter of safety, you should consider electrical repairs to be one of your highest priorities when considering how to decide what to renovate first.
• HVAC: Heating, ventilation, and air conditioning are not as critical to your health and safety as plumbing and electric. But a home with a broken HVAC system could be impossible to sell. If the HVAC system is broken, you should consider fixing it to be one of your highest priorities.

Aside from these four systems, anything else would be a lower priority. Again, if your home’s electrical service needs repair and upgrades, spending money on new carpet or putting in a guest bedroom is probably not a great allocation of your resources.

Here is a closer look at the four critical parts of a home. This will help you in how to decide what to renovate first in your home.

Structural Safety

Many things can weaken your home’s structure. Age, pests like termites, and weather can weaken your home. But the most destructive is water. Water leaking through your roof, walls, windows, doors, and foundation can cause your wood framing to decompose. This can weaken the structure to the point that it may bend or even collapse. A weakened structure is also less protective when your home is struck by wind, heavy snow, floods, earthquakes, or other natural disasters.

Water leaks can also encourage the growth of mold in your drywall. This mold weakens the drywall and also releases mold spores into the air in your home. These mold spores can cause an allergic reaction that leads to breathing problems.

Cracks in your foundation can allow water to leak into your home. If you live in a climate with freezing temperatures in the winter, ice formation in the cracks can cause the cracks to propagate and undermine the entire supporting foundation for your home.

Before you consider how to decide what to renovate first, you should have your walls, roof, and foundation inspected. If they need repair, they might rise to the top of your list of renovations. Drywall, framing, roof, and concrete repair might not be flashy, but they can guarantee that your home will remain structurally sound for decades.

Electrical

Your electrical system is both the most used and most risky system in the home. Faulty wiring, old outlets, and broken circuit breakers are some of the most common causes of house fires. They can also lead to electrocution.

Before you begin working on how to decide what to renovate in your home, you should have an electrician inspect the electrical system. If the system needs repair or updating, you may want to focus on the electrical system early in your renovation process.

This is particularly true for older homes. Some ways you can upgrade your home for modern electrical demands include:

• Replace fuse boxes with modern circuit breakers.
• Replace corroded or frayed wiring.
• Look for any outlets, fixtures, or switches with scorch marks or smoke damage nearby and replace them.
• Replace outlets near faucets in the kitchen and bathrooms with ground control fault interrupter switches.
• Replace fixtures or outlets that get warm after use. Heat is a sign of damage and inefficiency.

Plumbing

Modern plumbing has been responsible for the massive improvement in public health over the past 100 years or so. With clean water and sewage service, people no longer need to worry about cholera, dysentery, and other water-borne illnesses at home.

When your plumbing is not up to code or is outdated, you should consider replacing or repairing it when considering how to decide what to renovate first. A home with corroded pipes and sewer lines has an increased risk of disease.

Moreover, older pipes use lead. Lead has been linked to brain damage in children. By replacing pipes that contain lead or were connected using lead solder, you decrease the risk of lead poisoning to the residents of your home.

HVAC

The fourth essential system in a home is the HVAC system. Because of the complexity of the system, you can almost always find ways to upgrade and repair a home’s HVAC.

As you consider how to decide what to renovate first in your new home, have an HVAC installation and repair service inspect your HVAC system. HVAC runs almost all the time either cooling or heating homes in the U.S. This means that the mechanical parts, like air conditioning compressors, blowers, and furnaces, can wear out over time.

Just as important as their efficiency, HVAC systems can pose a safety risk as they age. Furnaces in many parts of the country run on natural gas or heating oil. As the fuel combusts, it produces exhaust gases, like carbon monoxide, that can poison you and your family. Keeping your furnace and its exhaust system in good repair can prevent tragedies.

Consider Curb Appeal

Once you have made sure your home’s essential systems are in good condition, you can move on to other renovations for your new home. When you decide what to renovate in your new home, you might focus on those renovations that have the greatest return on investment (ROI).

One area of high ROI renovations is exterior renovations. Curb appeal is the attractiveness of your home as viewed from the street. Curb appeal is critical to your home’s value because it can increase the sale price of your home by about 10% according to some estimates. This means your home that is appraised at $250,000 might go for as much as $275,000 if you renovate to increase your curb appeal.

Some common, and cheap, ways to improve curb appeal include:

• Siding installation
• Exterior paint
• New front door
• New windows
• Lawn care
• Landscaping

Weatherproofing

Another high ROI improvement is weather-proofing your home. Weather is a highly localized phenomenon. By tailoring your home to your location, you have a potential selling point to prospective buyers.

Some examples of weatherproofing that you might consider include:

• Sealing your driveway and patio: Ice can create cracks in your pavement. Sealing it can extend its life before you need to replace it. More importantly, sealing reduces cracking, flaking, and spalling, and discoloring and helps keep the concrete looking good.
• Installing heated floors: In some regions where winters are especially bitter, heated floors work with the HVAC system to keep your home warm in the winter. You can also consider installing heating coils in your driveway and walkways to reduce or eliminate the need to shovel snow in the winter.
• Hurricane garage doors: Garage doors that are hurricane-proof can help protect your home and your possessions during heavy winds.
• Double-pane windows: Although they are more expensive, the amount of money you will spend on heating in the winter and cooling in the summer make double-pane windows a high ROI investment.

Yard Improvements

When you consider how to decide what to renovate first, do not forget your yard. Not only does your yard contribute about 15% of your home’s value, but simple and inexpensive improvements can also have a huge impact on the enjoyment of your home.

Some of the improvements that you can make to your yard include:

• Fencing: A fence can improve the safety of your yard for children and pets. It can also become a selling point for your home. If you have a pool, a fence might be necessary to comply with local safety ordinances. You have a lot of choices for fences in construction, appearance, and cost. Contact a local fence company to see all of your options.
• Patio or deck: Many homes include a place for entertaining outside. A patio or deck can increase your enjoyment of your home and increase its value to potential buyers.
• Pool: Pools are controversial because they often do not have a positive ROI. But a majority of homeowners who install a pool say that the pool increased their happiness in their home.
• Outdoor kitchen: Many newer homes include an outdoor kitchen for summer entertaining. An outdoor kitchen can become a centerpiece of your patio or deck for barbecues. It can also help you save on cooling during the summer since your indoor kitchen is one of the hottest places in your home.
• Landscaping: In some parts of the country, landscaping has become critical to the identity of a home. Natural landscaping reduces water use and can even reduce the risk of fire damage and the need for fire restoration after a wildfire. Landscaping also provides a very high ROI, particularly when you use local plants that require little maintenance and have a high curb appeal.

Determining how to decide what to renovate in a new home can often be overwhelming. You may move in with the idea of renovating everything. But unless you plan to work full time on your home and flip it, you will probably need to prioritize. Just remember to set a budget so you can control your costs. Prioritize your renovations to focus on the four essentials for a home — structure, electrical, plumbing, and HVAC. And consider which renovations have a positive ROI and increase the enjoyment of your home.