Returns On Renovations
Spend your dollars wisely!
Call it renovation, remodeling, or rehabilitation. Whatever name you use, you may want to make changes in a home you own or one you want to buy. While your vision may include the coolest spa bathroom or most professional of kitchens, before you start surfing the web for ideas or asking contractors for bids, consider your ROI: Return On Investment.
What is Return On Investment?
There are upgrades that will come close to paying for themselves over time. There are upgrades that will never make up for the expense when it’s time to sell. Knowing which is which could help you decide between insulating the attic and adding a tiled steam bath. Of course, in some parts of the country you could tile the attic and use it as a steam bath in the summer! (Note: This is NOT a real remodeling suggestion.)
How long will you stay?
As you consider your renovation, think about how long you intend to stay in your home. If you plan to stay longer than 5 years, ROI may not be as important. You’ll get years of enjoyment from your Graceland-inspired Jungle Room, and when it’s time to sell you can strip the green shag carpet from the walls and paint them beige. But if you don’t plan to stay in the home that long, or you’re not sure of your plans, a fancy master suite addition might not be your best investment, as you’ll see below.
Cost vs. value
The 2020 version of Remodeling magazine’s annual Cost vs Value report reviews 29 home remodeling projects, comparing the average cost for each one with the value it retains at resale. Please note this information is based on national average costs and your individual experience will vary.
The projects range from manufactured stone veneer (ROI of 95.6%) to an upscale master suite addition (ROI of just over 51%). Here’s a rundown of the 5 projects they identified with the highest ROI:
|Manufactured Stone Veneer
|Garage Door Replacement
|Minor Kitchen Remodel (Midrange)
|Siding Replacement (Fiber-Cement)
|Siding Replacement (Vinyl)
And here are the 5 lowest:
|Master Suite Addition (Upscale)
|Grand Entrance (Fiberglass)
|Major Kitchen Remodel (Upscale)
|Bathroom Addition (Midrange)
|Bathroom Addition (Upscale)
There may be regional variations in what’s hot and what’s not. Remodeling also breaks out regional data so you can compare job cost, resale value and cost recouped in your area.
Aging in place
You may want to factor in national trends as you look at renovating your property. Baby Boomers are entering or already into their senior years, making universal design more popular. This concept has its roots in the disability rights movement and the Americans with Disabilities Act of 1992, but it has been embraced as a way for people to modify their homes so they can age in place. While you can’t turn your 2-story colonial into a single-level ranch, your bathroom remodel can include a curbless shower with a hand-held sprayer and grab bars, and your kitchen redesign can incorporate multiple counter heights.
Stay cool, keep warm
One more trend to keep in mind: Energy efficiency. Window replacements are in the 70%+ ROI range. Buyers value upgrades that make homes more comfortable and save them money. You’ll enjoy the comfort and savings, too. Projects to consider include energy-efficient windows, insulated doors, a programmable thermostat, high-efficiency water heater, and energy-efficient HVAC system. Don’t neglect the low-tech projects like sealing ductwork, windows, and doors.
Whether you’re renovating a home you’ve lived in for years, or want to buy a home that needs some work, talk to your licensed CrossCountry Mortgage loan officer. We have renovation mortgage loans to help keep the rain out with a new roof or create a rain bath in your new shower.