Home Remodeling Return On Investment And Should That Matter

When homeowners consider home remodeling, whether it be a kitchen remodeling, a bathroom remodeling, opening-up a living room, or more, one of the things they often ask remodeling contractors is not only how much will my home remodeling cost, but how much will it increase the value of my home.

Sadly, if you wish to put money in home improvements such as new siding, you will often do better financially than through remodeling a room although some rooms come close.

According to FortuneBuilders.com, the one room in the home where you’ll do the best is the bathrooms, followed by a kitchen remodel. 

Real Estate agents agree that bathrooms and kitchens sell houses. So how much can you expect to get back if remodel those rooms?

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Bathroom remodels 

A minor bathroom model will typically cost around $10,500 and is the one room in the house where the return on investment is pretty well guaranteed to provide an equal return on investment of 100 percent or more. There is no need to scrap the entire room over from start to finish, but if you have innovative and distinctive looking faucets, particularly with the showerheads, and have a fresh vanity, this is extremely appealing to women buyers or women influencers in particular. 

What about a major bathroom remodel. At around $26,000, a major bathroom remodel can be appealing, but you need to know that you can expect to lose money, although not a lot.

A typical major bathroom remodel will return around 93 percent of the money you spend on a major bathroom remodel. 

However, if you decide to sell your house, you are definitely making your home more appealing.

Kitchen Remodels 

Kitchen remodels are the other room where remodeling makes the most sense. 

A minor kitchen remodel, where you replace all of the hardware in the room and refinish rather than replace the cabinetry brings in 98.5 percent of value. 

Typical costs for a minor kitchen remodel is around $15,000 and returns up to $14.600.

Particularly if you plan to live in your house for 5 years or so, to do a minor kitchen remodel is a smart move.

If you elect to get a major kitchen overhaul, expect to lose money on value. Typically, a major kitchen overhaul, from top to bottom will cost you nearly $44,000 and you can expect to get back only around $40,0000 in return.

However, there is a significant caveat in modern cities where the price of real estate is high. People expect to pay the going rate no matter what it is, because that’s the price of local living. However, in cities such as Los Angeles or San Francisco, people expect to move into a home that is ready to go so to speak.

If someone pays $500,000 or more for a house, they don’t expect to be doing any remodeling themselves for a decade or so. 

Therefore, to be competitive in a seller’s market like Los Angeles, even if you will lose a little bit of money, you probably will be expected to provide the buyer with a stunning kitchen. 

An attic conversion 

A spare room for your elderly mother, or in places like California, a garage accessory dwelling unit, is very attractive in areas where rental units are extremely high.

On average, an attic conversion, or and an accessory development unit will return around 93 percent of return on investment, but that’s just in resale.

If the spare room is either rented out or turned into a living space used by your elderly parents, this can literally save thousands of dollars over the price of them living at an assisted living facility. 

Window replacement 

Other than those stated, the other expense for home improvement that brings bank for the buck is window replacement. 

New windows typically will return only around 90 percent of their value, but add greatly to the curb appeal of the house. 

Poor investements 

We’ve listed the good investments. Now for the poor ones. One of the major ones is adding a pool or an outdoor spa.

As attractive as these items might seem for many buyers, just as many people will be turned off by the expense involved in maintaining these items. 

Another poor investment is a master suite addition. Many master suite additions cost up to $136,000 and you are lucky if you get back 60 percent of your investment. 

Still another poor investment is a bathroom addition in an upscale home. They can cost up to $90,000 and typically bring back only a 54 percent return.

The bottom line 

There are two elements to consider, one is the return on investment, and the other is your comfort of living. A bathroom remodel and a kitchen remodel are nice to have even if they only provide a minimal return on investment. So consider not only how much you expect to get back upon sale, but how long you will plan on living in the home before reselling.