Question: Are there guidelines about how much work to put into a home? In other words, how much of the money you put in can you hope to make back in resale? What kind of renovations are worthwhile and which ones are not?
Answer: There are a lot of numbers floating around with regards to percentage of return on renovation investment. For kitchen remodels I have seen numbers vary from a 60% return on investment to over 100%. The numbers vary greatly because renovation circumstances vary greatly. For instance, if you spend $70,000 on a kitchen remodel in a neighborhood with home values in the $100,000s you will see a fairly low return on investment. If you did the same remodel in a neighborhood where the average home value is over $1,000,000, the $70,000 is a fairly conservative amount to spend and there will likely be a high return on investment. The most important thing to keep in mind is the neighborhood. The home values and conditions of other houses will be a good guide and will help prevent over and under improving your home. Below is a chart from Remodeling magazine. I have included this chart because the numbers seem more accurate than other information available on the web.
2009-10 National Averages
Midrange Projects |
Project | Job Cost | Resale Value | Cost Recouped |
$49,346 | $40,992 | 83.1% | |
$14,304 | $8,428 | 58.9% | |
$62,067 | $46,825 | 75.4% | |
$39,046 | $23,233 | 59.5% | |
$16,142 | $11,454 | 71.0% | |
$15,373 | $10,904 | 70.9% | |
$10,634 | $8,573 | 80.6% | |
$3,490 | $2,275 | 65.2% | |
$1,172 | $1,470 | 128.9% | |
$82,756 | $54,051 | 65.3% | |
$58,432 | $36,361 | 62.2% | |
$28,375 | $13,648 | 48.1% | |
$57,215 | $41,260 | 72.1% | |
$103,696 | $67,578 | 65.2% | |
$21,411 | $16,773 | 78.3% | |
$19,731 | $13,133 | 66.6% | |
$10,607 | $8,476 | 79.9% | |
$73,167 | $37,118 | 50.7% | |
$156,309 | $107,286 | 68.6% | |
$10,728 | $8,217 | 76.6% | |
$11,700 | $9,044 | 77.3% |
Upscale Projects |
Project | Job Cost | Resale Value | Cost Recouped |
$75,812 | $43,888 | 57.9% | |
$52,295 | $32,196 | 61.6% | |
$37,745 | $22,934 | 60.8% | |
$87,230 | $48,762 | 55.9% | |
$7,464 | $5,135 | 68.8% | |
$111,794 | $70,641 | 63.2% | |
$225,995 | $125,793 | 55.7% | |
$37,359 | $22,610 | 60.5% | |
$13,287 | $11,112 | 83.6% | |
$13,022 | $10,285 | 79.0% | |
$13,862 | $10,601 | 76.5% | |
$17,816 | $12,738 | 71.5% |
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