Is Your Remodeling Project a ROI?
August 20, 2009
Return on Investment is the name
of the remodeling game…
As I walk down my own street in Traverse City I can’t help but be amazed at all the neighborhoods that have sprung to life again with new additions, fresh coats of paint and perfectly manicured lawns that have “Sold” signs springing up everywhere, even in this economic downturn.
It has always been know that real estate - especially in desirable locations – is the best investment you can make. So, for almost three decades now, we have been obsessed with this revolution of remodeling, where homeowners all over the world are tuning sweat equity into cash at closing in a $230-billion industry. You don’t have to be a stockbroker or financial annalist to grasp what HGTV and its predecessor, The Home Depot, have been teaching us for the last 20 years. If you fix it, it will sell!
Before you start tearing down that old-fashioned lath and plaster and ripping up that avocado-colored shag carpet, you may want to know how much fixing up is actually required for your project to gain a return on investment (ROI). Many educated professionals - from interior designers to real estate agents - can tell you exactly what statistically proven percentages you are likely to reap from simple to complex remodels without under- over-designing.
Before you decide to join the revolution of remodelers, here are 3 important things to consider when deciding whether your home improvement project is going to worth the stress:
1. How does your project impact your home’s current appraised value?
2. How long do you plan to be in your home?
3. How strong is the resale market in your area?
Here are 5 remodeling projects that yield the highest (ROI)
Kitchen remodels 83% ROI
Siding replacement 83% ROI
Bathroom remodels 78% ROI
Basement remodels 75% ROI
Two-story addition 73% ROI
Garage addition 69% ROI
The most important factor in every remodeling project to determine your best ROI is the choice of who will be performing the work. Only the savviest of homeowners can do the work themselves to gain the maximum percentage of return. If you’re not sure whether you have a knack for calculating materials and wielding a nail gun, than you probably don’t. If you still choose to go it alone, remember this; triple the amount of time you think it will take and double the amount of money you think you are going to spend, because accidents are very expensive. If you would rather do it right the first time, think about interviewing the necessary professionals to do the work required. Even though painting may sound like fun to someone who has never undertaken a large project, a good paint job can be very tedious work, and laying tile is never as easy as it appears on TV!
Shane D. Inman, ASID, IIDA
Comments
Very good article. Sometimes you also have to factor in an "enjoyment" or use factor which is very hard to calculate. Having that extra garage adds economic value, put what enjoyment factor? I am more likely to drive the old sports car more often if I don't have to go over to a storage unit to get it.
Very informative. Long story short, it costs less to do it right the first time. I like knowing the percentages for ROI on location remodels throughout the home.
Nice job Shane. Maybe you should come over to RI and see what you can start over here.
Very good article. Although hard to calculate, non-tangible values should also be considered.
Great Article. Its nice to talk about what can be done, but the devil is in the numbers and sharing some of the ROI statistics put's in a framework that is easy to understand. We'll let you know when we have our next commercial project that needs work!
Shane, another great article! There is one thing I know, we could have never gotten through our "remodel" without your help. In fact we just had a meeting with TC officials who raved about the progress that TC has had on our corner because of this fantastic remodel. Couldn't have done it without you!!
Shane Nicely written, great points and to the point. Looking forward to future articles. Nice look to your web site. Teresa
guidance for the client is another form of education....an educated client will invest more in themselves (project)...better guidance leaves a client confident with out question..... very well done Shane...very well done I look forward to more education from your firm.
Great article. People need to realize that in a down market, it might make better sense to remodel instead of sell. Stay put and make your current home your dream home (working with Shane, of course) and wait for the market to recover.
Great post, thanks!
nice design!= and greate news