Summer is right around the corner and for many homeowners that means remodeling. I’m a firm believer in remodeling for your own use, but it’s wise to consider which projects will be good financial investments.
I’m frequently asked which improvements deliver a return on investment (ROI). I could give you the stock statistics, but that would only be part of the truth. You see, home improvement values depend greatly on your home, needs, and neighbors. Yes, neighbors. Why? Because surrounding homes impact your home’s value.
I will share some home-improvement ROI statistics for Salt Lake City as compiled in the Remodeling 2015 Cost vs. Value Report (www.costvsvalue.com), but first, here are some other questions to consider:
How badly is the improvement needed? If your kitchen is harvest gold with brown carpet (yes, it has happened) a minor kitchen remodel may pay you more than the 82.5% average ROI. Another example would be roof replacement. Is the roof simply old? Or is it actively leaking? If the roof is leaking and beyond repair, ROI is not your greatest concern.
What do your neighbors have? The average ROI of adding a bathroom in Salt Lake City is 51%, however, if homes in your neighborhood typically have two or more bathrooms, and you only have one, the payoff may be higher plus it could speed up a sale.
What fits your lifestyle? Try not to get too caught up in the ROI numbers game. It’s your home and YOU should enjoy the improvements. Going through all of the expense and inconvenience of remodeling to please the next owner doesn’t make sense. Use this ROI information to validate your choices, or as a caution to not overspend, such as for a home office, which returns only 44.2% of your money on average. That said, if an effective home office is what you need, go for it and make up the difference in higher productivity and earnings.
Why do you want to remodel? If you’re fixing up a home to sell in a couple of years, then this list, paired with the advice of a local Realtor, is key. For example, in Salt Lake City, and across the country, replacing a dated or drab front door is a no-brainer, it pays you pack 121%. But go for a steel door, not fiberglass, or that will drop to 74.5% return. Knowledge is power…and money in your pocket. That said, if you have always wanted a chef’s kitchen and plan to stay put, check out this Wall Street Journal article on residential chef’s kitchens.
It’s worth saying again…the payoff of a home-improvement is good information for decision-making, but shouldn’t dictate your plans. It’s one factor. In Salt Lake City, homebuyers value some projects more than others. The most prized projects here are different than in Orlando for instance. Now here is a sampling of the best and worst home-improvement investments.
Best and Worst Remodeling Projects for Salt Lake City Homes
- Replace Front Entry Door with Half Glass Steel Door 121.0%
- Attic Bedroom Remodel 97.4%
- Garage Door Replacement 96.9%
- Sun Room Addition 42.1%
- Home Office Remodel 44.3%
- Bathroom Addition 51.0%
A detailed list of Salt Lake City remodeling values can be found at www.costvsvalue.com. Even though the statistics are specific to Salt Lake City, they are not specific to your home or neighborhood. To really nail down the value of a remodeling project, you need to gather more accurate data. This includes project cost and vale.
To figure cost, either get an estimate from a contractor, or price out what you would need to spend to do it yourself.
Next determine the resale value by contacting a local Realtor. Establishing value requires combing through a lot of local sales data, but it’s something I’d be happy to help you with. I may even have a few ideas to add based on neighborhood remodeling trends.
What projects have you been thinking of doing this summer? Please comment below so we can exchange ideas and feel free to contact me for advice.
Data in this post was obtained from the 2015 Cost vs. Value Report ©2015 Hanley Wood, LLC. Complete data from the Remodeling 2015 Cost vs. Value Report can be downloaded free at www.costvsvalue.com.