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 primary 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 (unless you're some kind of magic home-renovation wizard—if so, please share your secrets). So the rule of thumb is: “Less is more.” In the world of home improvements, it’s often better to update/remodel while you're still living in the space, rather than waiting until you’re ready to sell. Why? Because you’ll get more enjoyment out of the upgrade, and it costs less than rushing through a remodel right before you list. Plus, some improvements are just for you, not necessarily for future buyers, and may not add much value in the long run. Know When to Spend—and When to Hold Back Let’s say your home is worth $350,000, and you spend $25,000 revamping the kitchen. Do not make the mistake of assuming that the remodel will increase your home’s value dollar for dollar. In reality, you might only see a 50% return on that investment. A fancy new kitchen is great, but it won’t necessarily boost your sale price by $25,000. That’s a tough pill to swallow, but it’s true! Small upgrades, like replacing outdated fixtures in the kitchen and bath, will yield better returns than a full-scale remodel. 34
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