CHAPTER 6 Upgrade with ROI in Mind OI in Mind
Making upgrades can be as easy as replacing the lockset on your front door and freshening up the paint, or as daunting as remodeling an entire kitchen or primary bath. The question is always, what improvements have the best return on the remodeling dollar?
Return on Investment (ROI) is generally less than 100% (with some exceptions that youe will see below) in real estate, so the rule of thumb is "less is more." When asked about when to remodel, my advice is that it is better to update/remodel your house while living in it so that you can enjoy the fruits of your labor, and not solely at the time to sell. Some desirable upgrades or home improvements will not return their cost in the sale price, so better make those during your ownership to be able to enjoy them. If your property is worth $950,000, and you spend $50,000 to revamp the kitchen, do not assume that the investment will increase the value, dollar for dollar. The remodel will add some value, but the return in dollars spent will be around 38% -80%. Smaller upgrades, like replacing outdated fixtures in the kitchen and bath, are certainly worthwhile, but major remodeling of those rooms might not be wise, simply for sale purposes. The ROI argument is not a case for ignoring necessary repairs that a home inspector would identify or that a mortgage lender 36
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