Your home purchase is one of, if not the, largest purchase of your lifetime. Keeping up with improvements is an ongoing and never ending process. How and where you spend your Home Improvement dollars is key to getting the most return back when it’s time to sell the home. How do you decide where to spend the money? Which project do you handle first? Unfortunately there is no answer that will be right for everyone, but there is a way to find out which is correct for you.
1. Budget – The first factor you’ll need to consider is obviously your budget. You may want to put a new kitchen in, but you may only have the budget for a new fence, or maybe not even that. Even if you don’t have a big budget right now, you can still get a good return on whatever money you have to invest. Just make a realistic budget and stick to it.
2. Need / Lifetime – The second factor you’ll need to consider is need, using the expected lifetime of products. The age of your house will play a huge role in this. Is your home 20 years old with the original roof? Most people put a new roof on every 15 – 25 years depending on the products used. Let’s say you are deciding between a new deck, a new bathroom and a new roof. Which should be the priority? Do you need the deck? If you don’t have one now, probably not, it’s more a want. If you have one now and the wood is cracked, warped and splintering? Good chance it’s a need. Do you need the new bathroom? If your home is 20 years old and the bathroom was changed 10 years ago, it’s possible. If the bathroom was just remodeled 5 – 7 years ago, it’s doubtful. What I like to do is look at the projects I’m deciding between and I ask myself “If I didn’t do anything, which would NEED to be changed first?” Whatever I think will wear out first goes first on the list.
3. Expected Stay – The next factor you need to know is how much longer you plan on staying in the home. Are you planning on selling within the next 12 – 18 months? Not selling until you retire? The answer will help you decide what type of project to take on. If you’re moving in the next 12 – 18 you may not want (or need) to spend $20k – $30k on a new kitchen. It may be a better decision to spend less and fix the grass, plant flowers and change the front door. Not moving for 20 years? You may want to spend that money on a new kitchen or new bathroom. Factor number 4 will make this choice a little easier.
4. ROI – Return on Investment, how much will the money you spend and the improvement add to the value of your home. No one can ever tell you exactly how much value will be added but there are tools that can get us close. Below is a few examples from the 2013 Remodeling Magazines Cost vs. Value report for the Charlotte region, more on that below. This report can help you when you’ve already gone through all other factors and still can’t decide . It’s also great if you’re selling in a few months and just want to do some small fixes. You’d be surprised how much a few hundred or thousand can return right before listing a home.
These are for a mid-range home. Upscale can be found on the complete list.
Major Kitchen Remodel – Spent – $50,124 Resale Value $37,250 Cost Recouped 74.3%
Minor Kitchen Remodel – Spent – $16,987 Resale Value $12,765 Cost Recouped 75.1%
Roof Replacement – Spent – $16,922 Resale Value $9,482 Cost Recouped 56%
Deck Addition (wood) – Spent – $8,214 Resale Value $6,459 Cost Recouped 78.6%
Entry Door Replacement – Spent – $1,072 Resale Value $719 Cost Recouped 67%
Complete Cost vs. Value List from Remodeling Magazine
So you’ve looked at the list and said “A major kitchen renovation, $50k? A minor one, $17K? Who’s kitchens are these? You can download the complete report from the link above. In the full report they lay out exactly what factors went into each number. They use a 200 sq. ft. kitchen with 30′ linear of cabinets for the major kitchen remodel. If you’ve got half that in your kitchen, you half the number they give to get close. I’ve personally checked the “Major Kitchen”, “Minor Kitchen” and “Roof Replacement” numbers and find them to be accurate. You could find cheaper prices, but you could also find a lot more expensive. Thoughts? Leave them in the comment section!