Real Estate
Turn Your House into a Model Home
Getting A Good Return On Your Investment
Getting a Good Return on your Investment
What is ROI? It's how much money you could recoup when you sell. Will that minor bathroom remodeling job be a good investment or not? Should you spend the extra money to fix up the kitchen? What about upgrading the siding?
According to the 2007 Cost vs. Value Report (a combined effort by Remodeling magazine and REALTOR® Magazine), adding a wood deck or doing a mid- to high-end siding replacement is the least expensive, but most lucrative, way to increase the selling price for many homes. Also, doing a mid-range bathroom remodel is one of the more popular home improvements. Homeowners can recoup an average of 83% for a vinyl siding replacement and 78% of their investment for a mid-range bathroom renovation. A "minor" kitchen remodel (in home improvement speak that's about $20K) is also usually a good investment. The national average for cost returned is also about 83%. Cost returned is slightly below than of 2006 in percentage of ROI, while the cost of work and materials has risen.
Keep in mind that spending more doesn't necessarily mean you'll get back a higher percentage later. In the last year, an upscale kitchen makeover, which might involve installing custom cherry cabinets and other luxurious amenities, the average recouped value is lower (about 78%) than for a minor kitchen remodeling project (83%) that is much less extensive or expensive.
| Project Job Cost | Resale Value | Average ROI |
| Wood deck addition, $10,347 | $8,835 | 85.4% |
| Siding replacement $9,910 | $8,245 | 83.2% |
| Minor Kitchen Remodel $21,185 | $17,576 | 83% |
| Window Replacement $10,750 | $8,750 | 80% avg |
| Bathroom Remodel $15,789 | $12,366 | 78.3% |
| Major Kitchen Remodel $55,503 | $43,363 | 78.1% |
| Attic Bedroom Remodel $46,691 | $35,771 | 76.6% |
| Garage addition $53,897 | $37,467 | 69.5% |
Marginal ROI Improvements
If you're looking to get your money back when you sell, it's a good idea to avoid designs that are very unusual. Buyers look for a place they can move right into and call their own. When you detour too far from the values of the mythical home buyer, you shrink the pool of potential buyers. Features that are really customized to the homeowners (i.e. home theater, wine cellars, etc.) may not appeal to as wide an audience. Depending on the neighborhood, most buyers may see these fancy add-ons as unnecessary and be unwilling to pay a premium for them, especially in less upscale areas.