Making Sure You Get a Return On Investment From Your Remodel
How Much Should I Invest?
If you are thinking about remodeling, the first thing you need to consider is how much of that investment will you really see when you sell your home on the Big Island. Most experts agree, that you’re much less likely to recoup your investment for a major kitchen or bathroom remodel than you would if you spent the same amount on basic home maintenance such as new siding. According to a recent study done by Remodeling Magazine, replacing your siding will recoup 92.8 percent of its cost. Replacing roofs and windows were also high on the list, returning 80 percent or more at resale.
Kitchen or Roof?
Kitchen and bathroom remodels continue to be two of the best investments you can make in your house. They are always at the top of a buyer’s priorities. However, it’s important to look at all of the improvements before making any decisions on remodeling especially if the budget is tight. Studies show that buyers prefer a new roof or a new a/c unit above having a new jacuzzi tub.
Return On Investment
Your return on investment will greatly depend on the value of your house and the value of the other homes in your immediate neighborhood. Installing a $10,000 stove in a $200,000 house, for example. Nor does it make sense to update your kitchen if your house is the only house in the neighborhood with just one bathroom. So, what improvements will give you the biggest bang for your buck?
Spending your dollars on a kitchen or bath remodel is a good investment if it is done with the value of your home and it’s market value in mind. A bathroom remodel will often return 100 percent of the cost. Minor kitchen remodels also provided returns of more than 100 percent in areas such as North Kona.
Kitchen, Bathroom or Both?
So what should you improve when you redo your kitchen or bathroom? It’s a pretty safe bet to think traditional: wood cabinets, commercial-look appliances, natural wood or stone floors and stone counter-tops. Walk-in showers have replaced whirlpool tubs in bathrooms. Floor-to-ceiling steam showers are also hot. A couple of key points to consider: Don’t spend money remodeling the bathroom if it’s the only one you’ve got. Your money will be better spent by adding a second bath. A National Association of Realtors study by Florida State University found that adding a bathroom increased the sale price of a home by 8.7 percent, more than twice the rate for adding a bedroom.
Enjoy the Fruits of Your Labor
Also, if you’re are not planning to sell right away, spend your money remodeling in a way that you’ll most enjoy. In other words, you can’t measure the value you get out of your use and enjoyment of the home improvements you make. Even if you get less than 100 percent of your money back, you’ll get the enjoyment of the improvements you make.
Keep it in Perspective
When you are remodeling for a resale keep in mind that a new kitchen or bath will definitely lose their glamour if there’s water in the basement and the shingles are falling off. Every homeowner’s first priority should be to keep the existing structure sound. It’s more important to resolve the immediate maintenance items first, and get the luxuries later.
What Is the Buyer Looking For?
It’s always a good idea when you are remodeling to resell to consider your projects from a buyer’s perspective. In other words don’t spend money on a new bathroom if the roof needs to be replaced. For a buyer, knowing the roof needs to be replaced is a much bigger issue than living with a functional, but dated, bathroom.
Most buyers have a limit on what they can spend for a house. If they know they don’t have to spend money on the upkeep of basic systems, then they’re more likely to buy the house and consider upgrading the kitchen or baths themselves. More than 70 percent of buyers who purchase existing homes know what they are going to remodel before they close the deal.
The importance of different maintenance issues varies with geographical location, too. Roof replacement was very important to buyers in the east, according to Remodeling, where homeowners recouped an average 96.3 percent of the cost. In the Midwest, the average return for the same improvement was just 71.1 percent.
First Impressions Matter
First impressions still count for a lot even in hot housing markets. If a potential buyer drives by your home for sale and they are not impressed the first time they drive by the chances are that they are not going to make an appointment to see the house.
If you are going to spend money on a property, work on making sure the curb appeal is strong. There are a lot of things that you can do to make your home stand out. Landscaping and a manicured lawn are very important but, you could also do something even more creative like adding a front porch to create interest to the exterior of a flat house. You want your home to convey a sense of welcome and if all your remodeling is on the inside but the outside of the house is shabby, you may never have a chance to even show the inside.
Creating More Space
Adding a room can be a good investment, particularly if you are in a hot housing market. Buyers love the added space that an extra room can give them whether it is for a bedroom, a sunroom, or a media room. Much of the demand is driven by homeowners who want more space, but then realize they can’t afford larger homes in their own neighborhood. Every 1,000 square feet added to a home boosts the sale price by more than 30 percent, according to the 2005 study for the National Association of Realtors.
Bathroom additions return the most, according to the Remodeling magazine’s report with an average of 86.4 percent. The addition of attic bedrooms, family rooms and sunrooms returned anywhere from 70 to more than 80 percent of the money spent — and that doesn’t factor in the value of your own enjoyment of all that new space.
You want to be sure that you don’t add on so much that you price your house right out of the neighborhood. You don’t want to be the leading value for the neighborhood but it doesn’t hurt to be on the upper end.
Home Theaters are Big Big Big
For some homeowners, home improvement isn’t about return on investment but much more about making their dreams and those of their family come true. Home theaters are a common request across the board when building a new home or remodeling an old one and typically it’s a big investment. Most home theaters involve wiring speakers into walls and extensive built-in cabinetry, as well as soundproofing and it’s not something you can take with you if you move. However, a home theater can have a broad appeal to every member of a family, so you may recoup a large chunk of your costs at resale. So while you are building your dreams keep your investment in mind as well: A home theater makes sense but a six-car garage not so much.
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