CHAPTER 6 Upgrading with ROI in Mind OI in Mind
An improvement or upgrade to your home can be as small a task as replacing the handset on your front door, or as extensive a project as remodeling an entire kitchen or bathroom.
When considering a home improvement, an important question to ask 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”. If your home is worth $575,000, and you spend $50,000 to revamp the kitchen, do not make the mistake of assuming that the investment will increase your home’s value, dollar for dollar to $625,000. The remodel may add value to the home, but the return in dollars spent most likely will be less than 30%. It is important to keep in mind that the market value of a home is determined by the prices of comparable homes recently sold in the same area. Therefore, if your home is already up to the general standards of neighboring homes, an extensive remodeling of your home will usually not pay off. In other words, no matter how old or out of date your kitchen is, if it is comparable to others in your area, spending $50,000 to remodel it is unlikely to increase the value of your home much, if at all. What it will do is help your home sell faster than other 25
Powered by FlippingBook