With the popularity of real estate TV shows like Fix or Flip and Big Texas Flip, we have all caught the home improvement bug. Tear down a kitchen cabinet here, splash a fresh coat of paint there, or -- for those really adventurous types -- demolish the entire building and start from scratch! Whether you decide to remodel or renovate, you should be aware that there is a substantial difference between the two.
While each type of project is common when an investor purchases an older home, there are some unique differences between the two. Each type of project has a different goal and will require a different amount of resources. Knowing the difference between the two can ensure you use the correct language when drafting a contract, writing a work order, giving a client an estimate, or billing upon the completion of a project.
Whether you plan to use the term for a new or existing home construction project, it is important to delineate the difference between the two.
What is home renovation?
The word "renovate" stems from the Latin word renovat, which means to make something new again. And that is exactly what an investor does when embarking on a renovation project: The investor makes the old new again.
In general, a renovation typically involves repairing, fixing, and updating a property. If you renovate your property, you may decide on a kitchen renovation project and install new kitchen cabinets or countertops. Or you may decide to update old fixtures and old plumbing or electrical systems on a property to brand-new ones that promise energy efficiency.
Renovating your home may be one of the most budget-friendly options. Unlike a home remodel, a renovation will not have you changing the entire house or room at once. What's more, with a renovation, you can work at your own pace and complete the project one section at a time. So, if you have the time and a little extra money, it may be time to renovat!
What is home remodeling?
The word "remodel" means to undergo structural reorganization, which is generally what happens when an investor remodels a home: The investor substantially changes the layout of the property in question.
Most often, the investor must hire a general contractor and a team of workers to make these types of changes and complete the remodel. The benefit of this type of project is that investors have the opportunity to tap into their creative energy and turn an older house into a brand-new home. This is what makes a home remodel project exciting but a bit costlier than a renovation.
However, while that may be the case, the price of lumber has fallen dramatically. So, if you have the cash available to you, now may be a great time to get your contractor on the phone to complete your remodeling project -- and start creating the home of your dreams.
Are there zoning restrictions?
While building that dream home for yourself or a potential buyer, you should also consider the zoning laws in the area before you bring out the bulldozer and sledgehammer. While zoning ordinances differ by locality, they generally determine the type of remodeling project you can embark on.
In addition to zoning laws, you may also want to conduct some research to see whether there are any restrictive covenants on the land your remodeling project sits on. If so, your home remodeling project could face additional restrictions.
Are renovations and remodeling projects tax-deductible?
Whether a remodel or renovation is tax-deductible hinges upon whether it was done as a personal residence or an investment property. If the remodel or renovations were done on personal property, the cost is nondeductible. However, if the changes were done on investment property, they are tax-deductible. So, if you are renovating or remodeling a property, you may want to consult with your tax advisor before getting started.
The Millionacres bottom line
Words have power and meaning. It is important to know the difference between a remodel and a renovation before embarking on any project. Remember: Renovate means to make something new, and remodel means to undergo a structural change.
Whichever project you plan to pursue, I am sure it will be a labor of love. So, grab a hammer or a forklift and get started on your new project!