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.” It is frequently advised in this area that it’s better to update/remodel your home while living in it and not solely when it comes to selling. That way, there is more enjoyment in the improvement and less cost and time in preparing for sale. Some desirable upgrades or home improvements will not return their cost in the sale price, so the owners should enjoy them all along. If your home is worth $275,000, and you spend $25,000 to revamp the kitchen, don’t assume that the investment will increase the value, dollar for dollar. The remodel may add value to the home, but the return on the dollars spent will be around 50%. More minor upgrades, like replacing outdated fixtures in the kitchen and bath, are undoubtedly worthwhile, but major remodeling of those rooms isn’t wise to sell your home. 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. Suppose significant problems, 30
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