Is Your Remodeling Project a Good Investment?
Remodeling or renovating your home, whether small or large, requires you to spend some money (or financing) upfront to get the job done.
But there are two questions you should ask yourself during this pre-planning phase for any project, especially costly ones:
1. Will it worth it when it comes to resale?
2. Will you get a high return on investment (ROI)?
It’s a good idea to do your research first and carefully consider any home improvement project, especially if you’re banking on recouping some of the cost when you sell your home.
Upscale vs. Mid-Level Projects
Even though an updated bathroom or kitchen will make your home more appealing to you and any potential buyers, you might not see that value in your resale price. That’s especially true if you stick with high-end designs and more upscale features.
Remodeling magazine’s Cost vs. Value Report for 2019 found that more “upscale” projects on average took the biggest hit across the nation when it comes to return on investment, with backyard patio jobs getting the lowest ROI.
The report covers the average cost of 21 remodeling projects and their average resale value one year later. Mid-range projects tended to do better than upscale ones.
In DC, for example, an upscale bathroom addition had a 60.9% ROI, where a mid-range addition was close at 60.1%. However, remodeling either in the mid-range or upscale range was a better ROI than under going an addition (i.e., 69.8% for a mid-range, and 62.5% for an upscale).
One of the lowest ROI in was an upscale master suite addition at 57.8%. A mid-range addition came in a higher at 67.6%. Most buyers want a master suite but they just might not want to see that entire cost reflected in the sales price!
Be Smart and Set Goals
Before starting a project, consider your goals along with your budget. You and your family want to enjoy your renovation and that may be your primary goal despite the cost. Who doesn’t want a sparkling new kitchen or spacious master bathroom to use every day, well before you even think about selling your home.
However, you never want to be the best home on the street and price yourself out of your neighborhood. Always keep that in mind or you may face a loss when it does come time to sell.
If you would like to review Remodeling magazine’s report, see below:
- Cost vs. Value Report To get the DC report, click on South Atlantic and then Washington, District of Columbia.