CHAPTER 6 Upgrading with ROI in Mind
Making upgrades can be as easy as replacing the handset on your front door or as daunting as remodeling a kitchen or bathroom or even repainting the entire house. The question is always 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 at the time it comes to sell. That way, there is more enjoyment in the improvement and less cost in preparing for sale. Some desirable upgrades or home improvements will not return their cost in the sale price. In 2016, a remodeling publication said the best ROI improvement a home seller can make is insulating the attic space, with a 116% return. If your home is worth $275,000 and you spend $25,000 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 Smaller upgrades, like replacing outdated fixtures in the kitchen and bath, are certainly worthwhile, but major remodeling of those rooms isn’t wise, just to sell your home. That’s not to say you can ignore necessary repairs that a home inspector would red-flag or mortgage company would demand before issuing a loan to a buyer. If major problems, like a leaking roof or outdated electrical wiring, exist, you may want to repair those before putting your home on the market, or expect to give concessions to the buyer.
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