CHAPTER 6 Upgrading with ROI in Mind OI in Mind
Making upgrades can be as easy as replacing the handset on your front door and freshening up the paint job, or as daunting as remodeling an entire kitchen or master bath. The question always is, what home improvements give the best return on the remodeling dollar?
Return on Investment (ROI) is generally less than 100% in real estate, so the rule of thumb is “less is more.” According to HGTV, doing minor upgrades to the bathroom, such as re-caulking, replacing old/outdated fixtures, changing the shower door, and giving the room a fresh coat of paint can yield a 102% return on investment. If your home is worth $275,000 and you spend $15,000 to revamp the kitchen, don’t make the mistake of assuming that the investment will increase the value dollar for dollar. The remodel may add value to the home, but the return in dollars spent will be around 50%. Smaller upgrades like replacing outdated fixtures in the kitchen and bath are certainly worthwhile, but major remodeling of those rooms is not wise. That’s not to say you can ignore necessary repairs that a home inspector would red-flag or a mortgage company would demand before issuing a loan to a buyer. If you are facing major problems, like a leaking roof or outdated electrical wiring, you must either address those repairs yourself or be prepared to make major concessions on pricing to the buyer, so that they will not have to bear the burden of major repairs as well as the price of the home. 36
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